Study: use of standards in IT saves money

Companies that standardize on specific hardware and software – and stick to those standards – spend about US$2,000 less per end user per year than other companies, according to a new study of large IT businesses.

The results released Thursday are from an ongoing study of 250 large IT shops by Hackett Benchmarking & Research, a Husdon, Ohio-based unit of AnswerThink Inc., a Miami-based consulting firm. Hackett helps user companies benchmark IT operations, as well as functions such as customer support, procurement and finance.

Annual end-user support at a standardized IT shop costs $5,400 compared with $7,400 at a company that uses a mix of technologies, Hackett found. Integration of different products increases costs, as does hiring and keeping IT experts conversant in a variety of products, the study found.

Agilent Technologies Inc., a medical instruments and technology company in Palo Alto, Calif., that participated in the study, has seen the light of standardization.

Harry Smith, controller of CIO programs at Agilent, declined to specify the company’s IT costs. But he said shrinking the “very large and varied” application set at Agilent is a top priority.

“The variety and complexity of our applications [isn’t] efficient,” Smith said.

Hackett also found that since 1998, spending has increased 35 percent on IT infrastructure, new technologies and the completion of projects delayed due to year 2000 remediation.

In other findings, the survey said 29 per cent of CIOs report to the CEO, compared with 20 per cent in 1998. Likewise, fewer CIOs now report to the chief financial officer – 37 per cent this year, compared with 44 per cent in 1998.

“We’re going to move from a technical CIO to a business CIO,” said Rick Roth, managing director at Hackett Benchmarking. The priorities of CIOs who report to CFOs are often dictated by financial concerns, he said. But in reporting to the CEO, CIOs can now help set business strategy.