IS Performance: A Day Late, A Dollar Short

The overall performance of the IS function in delivering quality and value-added resources in a timely and cost-efficient manner has been abysmal. So says Greg Hackett, president of The Hackett Group, a benchmarking and management consulting firm in Hudson, Ohio. Hackett’s comments come as the firm recently released a set of findings from its benchmark database of close to 1,300 companies.

Among the most damning numbers to emerge from the database: the average company completes only 37 percent of large IT projects on time and just 42 percent on budget. Even for short-term projects – those of less than 30 days’ duration – the on-time/on-budget rate is only about 80 percent.

And speaking of budgets, the research shows that little more than half of companies’ investments in application-software development is directed toward supporting the revenue-generating functions: manufacturing, operations, sales, distribution and such. As much as a third of current IT investment goes toward rebuilding administrative and support functions.

Companies in The Hackett Group’s benchmark database, launched in 1990, range in size from US$30 million to $44 billion in annual revenues. They respond to detailed questionnaires covering costs, staffing, productivity and operating practices. The Hackett Group uses the results to set benchmarks and evaluate knowledge-worker functions in finance, human resources, IT, planning and procurement. In return for their participation, client companies receive a report comparing their performance against the database.

Among other findings from the database:

    IT staff spend more than three days a week – almost 70 percent of their time, on average – keeping up with day-to-day operations. Only 8 percent of IT staff are focused on decision support, or thinking about the future leveraging of technology for strategic advantage.Executive leadership of IT is increasingly recognized as key to realizing the function’s strategic value and managing its cost growth. Some 87 percent of companies participating in the study have a CIO, and 75 percent of the time the CIO reports to the chief financial officer.The IT organization in the average billion-dollar company supports 2,794 end users – about 60 percent of the total employee population. However, more than a third of companies in the database have end-user populations representing nine out of 10 employees. These tend to be the companies with a high degree of embedded technology in products and services.