Gartner Advises Strategic IT Spend For Midsize Cos

by CXOtoday Staff    Apr 08, 2005

Only one-third of IT spending in midsize enterprises directly improves business performance, according to Gartner, Inc. Nearly two-thirds of the IT business in midsize organizations is spent on IT infrastructure (such as networks and servers) and utility applications (such as e-mail and payroll).

Since many midsize companies spend most of their budget on infrastructure, which is the foundation of all operations, business unit managers often do not recognize or appreciate the value of these investments and therefore their view of IT departments is compromised.

“Many midsize business executives have become disenchanted with technology solutions that they do not perceive to deliver business value. This has led to low credibility in many cases, which carries a high price for IT departments - pressure on budgets and lack of resource commitments in an IT environment of scarcity,” said James Browning, research vice president at Gartner.

A lot of midsize businesses struggle to prioritize IT investments and properly allocate assets. The challenge for IT managers in midsize organizations is that they are not always included in strategy meetings with business managers on the goals for the company.

“The task of the IT organization is to achieve high effectiveness at acceptable levels of efficiency and customer satisfaction. This is best accomplished when planning is interactive between IT and the business units,” added Browning.

According to Mika Krammer, research director at Gartner, “This communication will help set the role of IT and its primary direction, guide the selection of investments to be made, and clarify the type of IT architecture that will deliver the framework required to support the business.”