CIOs Use Efficiency Savings Wisely

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A common double whammy for today's CIOs is flat IT budgets and senior execs that expect to see IT help grow revenues. How are they dealing with it? At least some of them are taking money they save through improved IT efficiency and using it for growth initiatives.

According to Alinean, CIOs focused on infrastructure consolidation, standardization and automation have achieved a 10 percent gain in IT efficiency. They are plowing at least some of those savings into R&D, which has seen a 43 percent growth in spending since 2003.

While companies the Hackett Group considers world class spend 7 percent more on IT than their more average peers, the savings they enjoy elsewhere throughout the company more than offsets the bigger IT budgets.

Thanks primarily to their use of automation, companies with world-class IT groups spend 45 percent less on their finance operations, 25 percent less on procurement, and 13 percent less on human resources, says the Hackett Group.

CIOs will likely have to get even more creative with their spending, based on forecasts from Forrester Research. A weakening U.S. economy will hit CIOs in the pocketbook in the coming year, says Forrester, which predicts growth of just 5 percent in global IT spending for 2007 -- this following two consecutive years of 8 percent growth.