This was the finding of a poll of 30,000 organisations in 147 countries and formed the starting point for Meta Group's IT Financial Re-engineering seminar in London earlier this month.
Howard Rubin, Meta Group executive vice president and research fellow, said that, faced with current economic uncertainties, many businesses are cutting IT budgets in the short term, but this threatened long-term goals.
"These forces seem to be fighting each other," he said. "But some firms are looking at the problem in a new way that doesn't mean trimming out the muscle."
Rubin put forward a number of suggestions to improve the management of IT spending and assign priorities correctly.
He said the first step is to categorise all existing projects as either "run the business" (RTB) or "grow or invest in the business" (GTB/ITB), together with a deadline for getting returns.
Rubin explained that RTB systems were needed simply to "keep the lights on", whereas others could be split between necessary and discretionary enhancements, investments for competitive differentiation and investments to deepen market penetration and broaden reach into new markets. The second step is to decide the balance between RTB and GTB/ITB spending based on the deadlines decided.
Rubin said companies should keep spending under review and focus on driving RTB costs down both in the short term and the long term. He also emphasised that firms should identify the value they would achieve from their spending.
"There is no point in having a project to achieve 99.999 percent availability if .001 percent kills your company. Consider the impact of the loss instead," said Rubin. "Every system should be treated as an engineering solution to a business problem."
Brian Burke, Meta Group's vice president of international executive services, gave advice on how to balance costs, value, risks and timing of IT implementation. "You need to run IT like a business. Ask: 'What's the business value of the [application] asset?'" he said. "For instance, if it has low business value and is poor technically, retire it. The number one priority is to deliver existing systems automatically day by day, hour by hour."
