The Hackett Group Research Alert: World-Class IT Orgs Dramatically
Outperform Typical Companies at 15 Percent Less Cost
New Benchmark Research from The Hackett Group Identifies Four Key IT Strategy
Elements That Top Orgs Use to Improve Effectiveness and Efficiency
MIAMI & LONDON -- November 7, 2013
World-class IT organizations achieve dramatically higher levels of
effectiveness, meeting ROI expectations nearly twice as often, and support up
to 80 percent higher levels of business process automation, all at 15 percent
less cost than typical companies, according to new research from The Hackett
Group, Inc. (NASDAQ:HCKT).
The Hackett Group's research details how top-performing IT organizations focus
on automation and complexity reduction as essential IT strategy elements. They
are significantly more effective at providing IT enablement for key business
operations, and operate with up to 80 percent less complexity. The research
also spotlights four fundamental practices that differentiate world-class IT
organizations from typical companies: alignment of IT metrics and formalized
communication with the business; standardization of applications and IT
processes; integration of end-to-end business processes; and the monitoring of
business and IT outcomes.
The Hackett Group's research is based on an analysis of comprehensive
benchmark studies performed at over 100 Global 1000 companies over the past
few years. World-class IT organizations are those that achieve top-quartile
performance across an array of more than 60 weighted efficiency and
effectiveness metrics in The Hackett Group's IT benchmark.
"As companies grow, execute mergers and acquisitions, move into new markets,
and expand their product portfolios, many naturally see increased complexity
that can negatively impact performance. But this doesn't have to be the case,"
said John Reeves, Global IT Advisory Practice Leader for The Hackett Group.
"The performance of world-class IT organizations demonstrates that it truly is
possible to 'do more with less,' minimize cost, and deliver higher qualities
The Hackett Group's research found that world-class IT organizations spend 15
percent less than typical companies per end-user, including 25 percent less on
labor, 9 percent less on technology, and 8 percent less on outsourcing.
Reduced complexity is a key element of how world-class IT organizations
eliminate nonessential spending yet maximize staff productivity to drive down
IT costs. Hackett Group's research found evidence of this across a wide array
of IT metrics. World-class IT organizations carry 70 percent less complexity
in their technology platforms. In addition, they rely on 40 percent fewer
applications per 1,000 end-users. So as a result, hardware and software
complexity levels are significantly reduced, with 30 percent lower software
complexity and 60 percent lower hardware complexity.
At the same time, world-class IT organizations demonstrate dramatically higher
levels of effectiveness. They meet ROI expectations nearly twice as often as
typical, deliver against anticipated benefits nearly 80 percent more often,
automate up to 80 percent more business processes, and deliver dramatically
higher levels of self-service enablement.
Four Fundamental Practices of World-Class Companies
The analysis of The Hackett Group's 2013 benchmark data isolated four
practices that are fundamental to world-class organizations' performance, but
not widely adopted by typical companies.
Align IT Metrics and Formalize Communication with the Business - While most IT
organizations track performance metrics, few typical companies have formal IT
scorecards which provide a holistic view of IT performance and link metrics to
IT strategy. This is standard practice at world-class IT organizations.
World-class IT organizations use these scorecards to engage business leaders,
demonstrate IT's contribution to the business, and spotlight where they need
additional support or investment. This fosters a culture of continuous
improvement. They also take a formal, structured approach to communication
designed to foster quality interaction. Typical companies take a much more
Standardize Applications and IT Processes - While most typical companies
attempt to minimize customization through the use of a portfolio of "plain
vanilla apps," world-class IT organizations focus on driving down the number
of enterprise-wide solutions, creating a common enterprise platform that can
then be customized to address the needs of different business units. Fewer
applications result in a less complex IT environment, enabling world-class IT
organizations to deliver new capabilities more quickly. An underlying set of
common data definitions must also be in place before customization takes
In terms of IT methodology, The Hackett Group's research shows that limiting
IT to a small number of project delivery methodologies is the most effective
approach. Some projects may be sub-optimized, but adhering to fewer
methodologies and setting clear process standards increases the consistency of
project execution overall.
Integrate End-to-End Business Processes - From the earliest stages of project
delivery, world-class IT organizations make integration considerations a high
priority. This contrasts with typical companies, where the focus on
application functionality takes precedence. But the higher levels of
integration seen by world-class companies strengthens both IT and business
performance. The importance of integration will only grow as companies look to
improve the management and analysis of their data, and as IT organizations
make greater use of cloud-based service providers.
Monitor Business and IT Outcomes - For the IT function to be successful, it
has to work with the business to monitor IT and business outcomes. On the IT
side, one of the most critical outcomes to monitor is attainment of
architecture goals. To prevent IT architecture from becoming too complex,
world-class organizations monitor portfolio-level architecture goals and
metrics at a much higher rate than typical companies (75 percent of the time
compared to 47 percent). World-class IT organizations also do a better job at
holding IT staff and business owners accountable. While typical companies
focus on establishing the right Key Performance Indicators (KPIs), world-class
IT organizations also ensure that process owners are responsible for making
certain that promised benefits are realized.
"The four practices we've identified in our research are truly things that any
IT organization can address," said Erik Dorr, Senior Research Director, The
Hackett Group."These are the fundamentals in the world-class IT playbook --
alignment, standardization, integration, and monitoring. Collectively, they
allow IT functions to have much greater control over an expanding IT asset
portfolio. Each practice is essential to efficient and effective IT
performance. Together they function as a springboard to world-class
The Hackett Group's Research Insights, "The World-Class IT Advantage Part 1:
The Benefits of Pursuing IT Operational Excellence" and "The World-Class IT
Advantage, Part 2: The Four Fundamental Practices of Top-Performing IT
Organizations" are available to members of The Hackett Group Group's advisory
programs. A public excerpt of part one of the research is available on a
complimentary basis, with registration, at this link:
About The Hackett Group
The Hackett Group (NASDAQ:HCKT), a global strategic business advisory and
operations improvement consulting firm, is a leader in best practice advisory,
business benchmarking, and transformation consulting services including
strategy and operations, working capital management, and globalization advice.
Utilizing best practices and implementation insights from more than 8,500
benchmarking studies, executives use The Hackett Group's empirically-based
approach to quickly define and implement initiatives that enable world-class
performance. Through its REL group, The Hackett Group offers working capital
solutions focused on delivering significant cash flow improvements. Through
its Archstone Consulting group, The Hackett Group offers Strategy & Operations
consulting services in the Consumer and Industrial Products, Pharmaceutical,
Manufacturing, and Financial Services industry sectors. Through its Hackett
Technology Solutions group, The Hackett Group offers business application
consulting services that help maximize returns on IT investments. The Hackett
Group has completed benchmark studies with over 3,500 major corporations and
government agencies, including 97% of the Dow Jones Industrials, 84% of the
Fortune 100, 87% of the DAX 30 and 48% of the FTSE 100.
More information on The Hackett Group is available: by phone at (770)
225-7300; by e-mail at firstname.lastname@example.org.
The Hackett Group
Gary Baker, 917-796-2391
Global Communications Director
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