IT departments still too focused on cost-saving

Almost half of European IT leaders say the IT department’s core function is to reduce costs, according to latest research from Claranet.

With IT budgets going up in recent years, IT departments’ fixation on cost reduction might be expected to be lower on the agenda than enabling revenue generation for the wider business or innovating to support growth strategies. However, recent research from Claranet shows IT departments across Europe are still fixated on containing costs at the expense of working on new value-add activities.
Independent research, which was conducted by Vanson Bourne on behalf of Claranet and surveyed 900 European IT leaders, has found that cost reduction is significantly more likely to be a focus for IT departments in 2016 than it was a year ago. In spite of budget increases, 46 per cent of respondents highlighted cost reduction as a core function today, compared with just over a third (34 per cent) in 2015.
This focus on costs is likely to come to the detriment of other value-add activities; just 29 per cent of IT leaders view enabling revenue generation for the wider business as a core function, and only a quarter (25 per cent) believe they should be engaged in increasing customer loyalty.
Commenting on the findings, Michel Robert, Claranet’s UK managing director, said: “European IT budgets are growing, which would suggest there’s a recognition within businesses of the importance of IT, however time and resources are still not being spent on more forward-thinking projects that can generate more revenue in the long-term. It is clear from the data that the focus on cost reduction and ‘keeping the lights on’ we witnessed in last year’s report has been maintained and, for many, has actually increased. It goes without saying that costs are important, but it’s critical that IT departments can reposition themselves internally as enablers of business agility and innovation, rather than as cost centres.
“Any business looking to digitally transform their processes must have the right partners and suppliers in place to carry out those standard tasks universal to IT departments. By working with a managed service provider, CIOs can effectively outsource this work and spend more time working on strategy and revenue-generating activities. Many talented IT directors have their hands tied with tasks inappropriate to their team’s skillset, so taking on an external partner can solve an HR problem as much as it can solve issues with the IT function’s ability to support of the wider business," Robert concluded.
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