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 Business Wire 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 of service." 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 informal approach. 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 place. 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 execution." 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: http://insights.thehackettgroup.com/2013wcpa-it-press-register 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 email@example.com. Contact: The Hackett Group Gary Baker, 917-796-2391 Global Communications Director firstname.lastname@example.org
The Hackett Group Research Alert: World-Class IT Orgs Dramatically Outperform Typical Companies at 15 Percent Less Cost
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