CIOs know intuitively that too much customization and a hodgepodge of IT products will boost costs. Yet when business managers have argued that their particular group has unique needs requiring yet another custom system, CIOs haven’t had a strong counterargument in favor of standardization.
But a study of 250 companies by benchmarking firm The Hackett Group in Atlanta may provide the ammunition CIOs need to defeat the customization argument, says David Hebert, IT practice leader at Hackett. The study found that companies that fail to reduce the complexity of IT spend 30 percent more on finance operations and 18 percent more on human resources functions, per employee, than companies that have successfully battled the complexity monster.
Why? Overhead costs are much higher at companies that have more than ten finance applications or lack a global standard for HR apps. IT costs go up because there are more hardware and software vendors to deal with, more customer and supplier databases to manage and integrate, and more incompatible data.
IT organizations that keep a lid on complexity spend 15 percent less than their peers and operate with 36 percent fewer staffers, while bringing in projects on time and under budget 25 percent more often, Hackett found.