According to a study published by the Hackett Group in June, technology, labor, outsourcing and overhead costs for general and administrative functions are reduced by 29 percent in the “digital world class”, ie the best digital performer.
World-class digital companies work 26 percent less full-time equivalents, reduce labor costs per end-user equivalent by 33 percent, and achieve 41 percent lower outsourcing costs, despite 3 percent more they spend on technology than their non-world-class counterparts.
By investing 36 percent more money in ‘software as a service’, digital world-classs improve agility, responsiveness and flexibility. These advanced companies also spend 63 percent more on emerging technologies such as machine learning, natural language processing, and the blockchain than their competitors.
“Maximizing ROI even before new technologies are introduced IT management needs to review ideas based on past work before they become a project, so they can achieve the expected results, “said Chris Key, global practice manager for Hackett Group’s IT management consulting program at CIO Dive.
The rapid return on technology investment “depends on sound value analysis and ranking of opportunities,” says Erik Dorr, vice president of research at Hackett Group. Significant savings are also linked to continuous improvement in key transaction processes
Digital investment can reduce business costs, but only if the right investments are made strategically. Data and analysis, automation, and cloud-first strategies are effective investments worth starting with. Data and analytics can lead to cost savings if companies turn analytics into an insightful information tool to help them make decisions, ”said Key. data and analytics managers are 1.7 times more likely to demonstrate return and business value
With strong data management, IT managers can use automation that results in additional cost savings. According to Dorr, companies introducing automation can directly replace traditional labor costs. Successful automation use cases target core, common tasks and build value from it.
Accelerating cloud-based deployments and using a cloud-based approach reduces backend maintenance, further increasing cost savings . “In terms of licenses, these are directly different cost savings, but we see cost savings and reductions in maintenance costs,” Key noted.
But it’s not enough to just install better technology. At the same time, IT managers need to retire outdated systems. Key says companies need to simultaneously introduce new tools and “aggressively” shut down old systems to maximize performance.
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