A new study by the Hackett Group contends there are four characteristics that link the solid financial performance of companies to how efficiently their IT departments run.
The survey, which polled 50 companies in the Fortune 1000, said 46 percent of “top-performing” IT departments deliver higher operating margins and 49 percent higher net margins to their companies.
The criteria for a top performer centered around the following four things:
1) Investment allocation. The IT department invests less in existing infrastructure and utilities, and instead focuses on innovation and improvement.
2) Project pipeline. Top performers don’t invest in just any project. They are incredibly discerning, which allows them to keep the project list short and deliver projects on time.
3) Delivery performance. When a project gets started, it gets finished in the proposed time period.
4) Application portfolio management. You manage all of your existing systems well and efficiently (so well that they’re just “there,” rather than ever really being a problem or hindrance to business). This allows you to focus on any new, innovate apps that come down the pipeline.
Erik Dorr, Hackett’s co-author of the survey, says these top performers also delivered 39 percent more than their peers on return on assets and 43 percent in return on equity.
He says that before IT departments can take the steps needed to become a top performer, however, they must first show that they can keep the lights on effectively, keep costs down, and use that as a baseline for being something that can help the business innovate.
“It’s very much a gradual process of building the trust and showing you can deliver core services efficiently,” he says. “Then they can use that as a basis, focusing on building the businesses from there.”