New Research from The Hackett Group Offers
Recommendations For How IT Can Improve Efficiency,
Effectiveness
As IT organizations shift their focus to improving enterprise
agility and driving innovation, top performers are finding new ways
to drive value, according to new research from The Hackett Group,
Inc. (NASDAQ: HCKT). But typical IT organizations face significant
challenges in this area, and The Hackett Group’s research
recommends organizations focus on a number of IT strategy areas in
order to make the shift towards value-based IT management and
improve efficiency and effectiveness.
A public version of this research, entitled “The World-Class
Performance Advantage: IT in the Era of Business Technology
Convergence,” is available, with registration, at this link:
http://goo.gl/crKPpg.
“The traditional way that IT creates value is changing,”
explains The Hackett Group IT Transformation Practice Leader Mark
Peacock. “In the past, business strategy and operational plans
translated into the need for technology capabilities. Today,
technology innovation has become a primary driver of business
innovation and value creation. So the historic process has reversed
itself, with technology-led value creation opportunities driving
strategy while strategy simultaneously drives technology planning.
This convergence of business and technology has made business
relationship management a key skill, and increased the importance
of IT planning.”
According to The Hackett Group IT Executive Advisory Practice
Leader Scott Holland, “IT today has a historic opportunity to
elevate its value contribution. But dramatic changes in culture and
skill sets are required. IT organizations that fail to make the
transition to value-based IT management will see their relevance
erode as the businesses take control of their own technology
roadmap, relegating IT to the role of a utility.”
While world-class IT organizations excel at driving greater
business value, they continue to maintain a sharp focus on cost
reduction. The Hackett Group’s research found that world-class IT
organizations now spend 19 percent less than their peers and
operate with 14 percent fewer staff, while delivering higher levels
of effectiveness. World-class IT organizations also dedicate
substantially fewer resources to “run” activities (55 percent vs 63
percent), and instead focus more investments in “build” activities
(39 percent versus 30 percent). One key to accomplishing this is
lower technology complexity, the research found. World-class IT
organizations have also developed competencies in agile and
iterative development, moving beyond the traditional waterfall
development approach to enable them to be more responsive to
changing business needs and deliver client-facing applications more
quickly.
World-class IT organizations are those that achieve top-quartile
performance in both efficiency and effectiveness across an array of
weighted metrics in The Hackett Group’s comprehensive IT
benchmark.
One measure of the effectiveness of world-class IT organizations
is their ability to help reduce costs in finance, procurement, and
HR, largely through transactional automation and self-service
enablement. World-class IT organizations also continue to increase
their focus on enabling greater levels of effectiveness on front
office activities. The presence of cloud computing service models
such as Infrastructure as a Service (IaaS), Software as a Service
(SaaS), and Platform as a Service (PaaS) continue to be front and
center for accelerating the drive to both higher levels of business
enablement and increased cost optimization. The anywhere, anytime
availability of these solutions creates an opportunity for business
partners to have an agile service model that provides a level of
comfort in their ability to support and manage their demand in the
most expeditious, cost conscience way.
“With more and more businesses looking to work directly with the
cloud vendors, it’s critical for IT to be included in any
discussions on how and/or what cloud solutions may be the best
candidate for supporting the business,” said Mr. Holland. “As IT
continues to be on point for how technology and data are being
leveraged across the enterprise, these conversations are no
different. IT’s role is not to complicate the process. They are
there to ensure that there’s an understanding of how a move to the
cloud could impact the ability to support future business demands.
By including IT, there is a higher probably that technology
landscape/roadmaps, defined as part of IT’s enterprise architecture
role, will be governed and IT will be able to operate with greater
levels of efficiency long term.”
The challenge moving ahead is for IT organizations to shift from
internal process execution to focus on customer and business value.
To master value-based IT management, The Hackett Group recommends
that IT organizations develop competencies in several areas. In
order to enable technology-led value creation to drive strategy, IT
organizations should take an active role in identifying
opportunities for value creation, including internal process
improvement, value-chain digitization, product or service
innovation, and business model innovation. To facilitate the
transformation from a focus on internal process execution to a
customer- and business-value orientation, IT organizations should
master value-based IT management, making investments in business
relationship management integral to IT planning.
IT organizations should also establish value-based IT
governance, The Hackett Group’s research recommends, to place the
principle of business value maximization front and center through
organizational and process design. Part of this is the clear
delineation of IT and business ownership for strategy, technology
acquisition, solution development, and application maintenance.
Financial management is at the heart of value-based IT
management, according to The Hackett Group’s research. IT
organizations can elevate their financial management capability to
improve chargeback and cost accounting systems, and develop a
comprehensive total cost of ownership model for decision support.
This may require IT to acquire or develop new financial management
competencies.
While most IT organizations have mature internally focused
performance management processes and scorecards, a focus on
maximizing business value is often nonexistent. The Hackett Group
recommends that IT organizations adopt value-based performance
management systems which tie IT performance to business outcomes,
complement traditional IT performance management and measurement
systems.
Finally, to maximize value from technology investments, resource
allocation decisions must be managed as a portfolio with different
risk/reward profiles for investment alternatives, The Hackett Group
finds. IT organizations must integrate IT portfolio management with
the portfolios of technology-based transformations in the business,
based on value maximization. This collaborative portfolio
management process should drive the IT agenda and underpin all
funding and sourcing decisions.
The Hackett Group’s World-Class IT Performance Advantage
research is based on an analysis of results from recent benchmarks,
performance studies, and advisory and transformation engagements at
hundreds of large global companies.
About The Hackett Group
The Hackett Group (NASDAQ: HCKT) is an intellectual
property-based strategic consultancy and leading
enterprise benchmarking and best practices implementation
firm to global companies. Services include business
transformation, enterprise performance
management, working capital management, and global
business services. The Hackett Group also provides dedicated
expertise in business strategy, operations, finance, human capital
management, strategic sourcing, procurement, and information
technology, including its award-winning Oracle EPM and SAP
practices.
The Hackett Group has completed more than 11,000 benchmarking
studies with major corporations and government agencies, including
93% of the Dow Jones Industrials, 86% of the Fortune 100, 87% of
the DAX 30 and 51% of the FTSE 100. These studies drive its Best
Practice Intelligence Center™ which includes the firm's
benchmarking metrics, best practices repository, and best practice
configuration guides and process flows, which enable The Hackett
Group’s clients and partners to achieve world-class
performance.
More information on The Hackett Group is available at:
www.thehackettgroup.com, info@thehackettgroup.com, or by calling
(770) 225-3600.
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version on businesswire.com: http://www.businesswire.com/news/home/20151022005817/en/
The Hackett GroupGary Baker, 917-796-2391Global
Communications Directorgbaker@thehackettgroup.com
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