What separates the best IT departments from the rest? For one thing, their staffs are much better paid. New research from The Hackett Group consultancy finds that employees at world-class IT organizations earn nearly one-third more than their counterparts in other technology shops do.
The reason is that the top IT shops—which Hackett defines as performing in the top quartile in measures of both efficiency (such as IT cost and productivity) and effectiveness (for instance, economic return)—have retooled their workforces to focus on higher-value activities such as business process management and on the latest technologies such as Web services. Employees with such expertise typically command higher salaries.
According to the survey, the median wage rate at world-class IT organizations is $119,383. Among the rest of the IT organizations, the median wage rate is $90,766. Hackett’s 2005 “Book of Numbers”—the group’s biennial survey benchmarking the performance of IT organizations—also finds that the best of them employ fewer workers per 1,000 end users and outsource more. For this year’s study, Hackett surveyed more than 200 large companies.
Over the past three years, according to the survey, companies with world-class IT organizations have significantly increased their spending on outsourcing, farming out 14 percent of the cost of routine functions such as infrastructure and applications management. Everywhere else, outsourcing spending has remained a fairly stable 9 percent of IT expenses. “World-class organizations are using outsourcing for competitive advantage,” says David Hebert, Hackett’s IT practice leader.
One surprising finding, according to Hebert, is that world-class IT organizations experience considerably higher staff turnover than do average IT departments: 150 percent more among managers and 84 percent more among IT professionals. This job churn serves to make room for people with the latest and highest-value skills, he says. “You see a lot of effort around implementation in IT, but the real battle begins after implementation. World-class organizations are making room for the people who can bring the most value to IT.”