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IT Agility Embraced By Top-Performing Companies

By Dennis McCafferty on 2010-07-14


A new kind of IT organization has emerged in the wake of the recession -- one that has reduced fixed costs by using on-demand strategies, according to a new study from The Hackett Group. This degree of "IT agility" helps organizations better capitalize on business opportunities and minimize risks today. It is no longer about zeroing in on "cutting IT costs" (although that is certainly part of the equation). It is about taking better advantage of new, available Service Delivery Models to match IT initiatives with business performance. This approach is needed now more than ever here in North America, where economic growth is projected to lag dramatically behind that of Asia, putting at risk our ability to remain globally competitive. Hackett's research distinguished the IT practices of "top performer" organizations -- as defined by those that achieve the best results across more than 20 relevant IT agility metrics -- from those that experience more typical performance results. More than 30 companies took part in Hackett's study. Here's what the resulting research reveals:

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Selling, General and Administrative (SG&A) costs


Up to one-half of total Selling, General and Administrative (SG&A) costs of an organization can come from IT. Organizations suffer when revenues cannot keep up with these rising expenses.

Global competitive impact is lacking


North America is forecast to see a mere 2.5 percent in annual GDP growth through 2012, compared to 7.9 percent for the Asia-Pacific region.

What is "IT agility"?


IT agility is the capability of organizations to anticipate and respond to business change and maintain IT costs to within 15 percent of revenue change.

How do you achieve IT agility?


By exploiting new Service Delivery Models to link business performance with IT-driven initiatives, transforming IT function into a business partner.

Top Performing Companies


Only 20 percent of top-performing organizations rank software infrastructure innovation, such as integration middleware, as a "highly effective" way to meet goals.

Top Performing Companies


80 percent of top-performing organizations say that technical-infrastructure virtualization with storage, servers and other needs is highly effective.

What The Average Performers Say


Only 33 percent of average performing organizations believe that cloud computing and other on-demand infrastructure sourcing is a highly effective way to meet goals.

What The Top Performers Say


67 percent of top-performing organizations believe that cloud computing/on-demand infrastructure sourcing is highly effective.

How Else Do Top Performers Contain IT Costs?


1. "On-demand" application-sourcing such as SaaS (cited by 50 percent of top performers) 2. Business-process outsourcing (cited by 50 percent of the top performers).

Key Takeaways:


1. Tech-infrastructure virtualization is the most consistently effective way to drive agility. It is two to three times more effective than open-tech standards, app-architecture innovation or software-infrastructure innovation.2. Scalable, pay-for-use systems help IT move from being considered "overhead" to being a valued business player in the organization.3. On-demand tech helps IT stabilize costs/capacity for organizations, while increasing time-to-market and other business goals.

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