Hackett: World-Class IT Organizations Spend 10 Percent More Than Peers, Pay More for Talent, and Deliver Better Strategic Suppor
September 27 2005 - 9:30AM
Business Wire
World-Class IT organizations now spend 10 percent more than typical
companies, and have fully-loaded IT wage rates that are 32 percent
higher than their peers, according to 2005 Book of Numbers(C)
research from The Hackett Group, a business process advisory firm
(NASDAQ:ANSR). This is the first time in recent years that
world-class IT organizations have spent more than typical
companies. According to Hackett, the research data indicates that
this increased spending is being driven by world-class IT
organizations restructuring their workforces, enhancing the skill
and experience level of their staff to improve their ability to
deliver competitive advantage and provide strategic support.
Typical companies have made only modest improvements in these
areas. The first look at Hackett's 2005 Book of Numbers analysis
also finds that while typical companies have not significantly
increased their use of shared services and outsourcing, world-class
IT organizations have dramatically increased their focus in these
areas. World-class IT organizations now report they have moved most
of their technology portfolio to shared services, and spend
significantly more than typical companies on outsourcing in key
areas. World-class companies have seen a 168 percent increase in
spending on outsourcing in infrastructure management and a more
than 400 percent increase in spending on outsourcing in application
management over the past three years. The Hackett Group is a world
leader in best practice research, benchmarking, and advisory
services that empower executives to achieve world-class enterprise
performance. Hackett offers analysis and insight backed by metrics
derived from 3,300 benchmark studies over 13 years at nearly 2,000
of the world's leading companies, including 93 percent of the Dow
Jones Industrials. "More than any other support function, IT has
the potential to drive competitive business advantage. But at
typical companies, IT is too busy just 'keeping the lights on.'
Most CIOs appear to be simply ignoring business challenges in terms
of the way they run their IT operations," said Hackett IT Research
Leader David Hebert. According to Hackett Senior Director, IT
Research, Scott Holland: "World-class IT executives are making
major changes, building a smarter, more skilled workforce of
managers and professionals that can deliver business value. They
are finding ways to control and reduce spending on routine
operations, in part by moving transactional activities to
outsourcers, and freeing up budget to increase capabilities in
areas such as customer service, supporting new business models, and
enabling interoperation within different parts of the business with
end-to-end processes. In addition, the success they've had at
providing real strategic advantage has in some cases helped them
convince management committees to increase IT spending. Taken
together, this is why we're seeing a reversal, with world-class IT
organizations now spending more than their peers." According to
Hackett's research, world-class IT organizations now spend 10
percent more than typical companies on IT ($9,617 versus $8,715 per
end user). World-class IT organizations now rely on 28 percent
fewer staff than typical companies (26.5 versus 36.8 IT
staff/thousand end-users). However they show fully-loaded wage
rates that are 32 percent higher ($119,383 versus $90,766/IT
staffer). This wage rate gap has grown dramatically over the past
two years. At the same time, world-class companies are seeing
turnover rates for professionals and managers that are 84 percent
and 150 percent higher than typical companies, respectively. NOTE
TO JOURNALISTS: A chart illustrating select findings described
above is available on request, and will be distributed via
BusinessWire. In conjunction with these staffing changes,
world-class IT organizations are also showing much more strategic
use of sourcing alternatives than typical companies. World-class
companies now dedicate nearly half of their infrastructure
management process costs to outsourcing. World-class IT
organizations spend $924/end user in this area, 69 percent more
than typical companies, and have increased their spending by 168
percent since 2002. In application management, world-class
companies now dedicate more than 20 percent of their process costs
to outsourcing. They spend $450/end-user in this area, 91 percent
more than typical companies, and have increased their spending by
over 400 percent since 2002. In contrast, the combined outsourcing
spend of typical companies in these areas has remained flat over
the past three years. World-class companies are also now making
much greater use of shared services than typical companies, having
moved nearly 90 percent of their technology portfolio to a shared
services environment. Hackett's 2005 Book of Numbers research also
clearly showed that companies that achieve world-class status in
other key SG&A areas leverage technology more effectively than
typical companies. For example, while world-class finance
organizations spend 39 percent less than their peers on technology,
they make better use of technology and have simplified and
optimized their infrastructure, relying on just one enterprise-wide
finance platform while typical companies rely on two. In HR,
technology plays a key role in helping world-class companies
operate with 14 percent fewer transactional staff than typical
companies. World-class procurement organizations also turn to
technology to reduce labor requirements, and streamline both low-
and high-value processes. Procurement staffs at world-class
organizations, aided by technology, are able to process over four
times more orders per procurement employee annually than typical
companies at 61 percent lower cost per purchase order. The Hackett
Group's research into world-class performance is compiled in its
Book of Numbers series, which provides senior executives fact-based
performance metrics and insights based on Hackett's extensive
database of best practices and process metrics in IT, finance, HR,
procurement, and other areas. Hackett Book of Numbers volumes are
available to members of Hackett's World-Class Programs --
premium-value, membership-based programs providing a tailored mix
of benchmarking services, confidential advisor inquiry, best
practices research, and peer learning opportunities. More
information on The Hackett Group is available: by phone at (770)
225-7300; by e-mail at info@thehackettgroup.com; or on the Web at
http://www.thehackettgroup.com. About The Hackett Group The Hackett
Group, http://www.thehackettgroup.com, a business process advisory
firm and an Answerthink company, is a world leader in best practice
research, benchmarking and advisory services that empower
executives to achieve world-class enterprise performance. Only The
Hackett Group empirically defines world-class performance in sales,
general and administrative (SG&A) and supply chain activities
with analysis gained through 3,300 benchmark studies over 13 years
at nearly 2,000 of the world's leading companies. The foundation of
Hackett's benchmarks, transformation services, and membership-based
advisory programs is our proprietary database of
Hackett-Certified(SM) Practices, approaches which are proven to
correlate with superior performance metrics. This unparalleled
knowledge repository enables Hackett business advisors to provide
data, advice, and strategic insight with a level of integrity and
authority available nowhere else. As of this writing, Hackett
clients comprise 93 percent of the Dow Jones Industrials, 76
percent of the Fortune 100 and 90 percent of the Dow Jones Global
Titans Index. Hackett-Certified and Book of Numbers are service
marks of The Hackett Group. This press release contains "forward
looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995 and involve known and unknown risks,
uncertainties and other factors that may cause Answerthink's actual
results, performance or achievements to be materially different
from the results, performance or achievements expressed or implied
by the forward looking statements. Factors that impact such forward
looking statements include, among others, the ability of the
products and services mentioned in this release to deliver the
desired affect to state governments, our ability to effectively
integrate acquisitions into our operations, our ability to attract
additional business, our ability to effectively market and sell our
recently launched transformation advisory product offerings and
other new services, the timing of projects and the potential for
contract cancellations by our customers, changes in expectations
regarding the information technology industry, our ability to
attract and retain skilled employees, possible changes in
collections of accounts receivable, risks of competition, price and
margin trends, changes in general economic conditions and interest
rates as well as other risks detailed in the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 2004
filed with the Securities and Exchange Commission. We undertake no
obligation to update or revise publicly any forward-looking
statements, whether as a result of new information, future events
or otherwise.
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