A small number of European banks get more business value from information
technology-including faster, more flexible support of business objectives-than
do their peers, and at a far lower cost. How? Our research found that this
select group combines superior IT management with a tight focus on using IT to
help improve business performance.
We surveyed 37 retail and wholesale banks to understand how they manage
technology and to identify the IT-management practices of the top performers. In
the course of the effort, more than 70 variables of management practice-ranging
from the management of data centers and application portfolios to IT governance
models and outsourcing contract provisions-were examined. We collected
quantitative and qualitative data on the banks' IT spending and on their
staffing levels for internal personnel and contractors.
The survey found that IT spending varied widely-from 10 to 30 percent of
operating costs, or 4 to 18 percent of operating income. Higher levels of IT
spending didn't increase the effectiveness or efficiency of the business.
Indeed, the banks that appear to get the most business value from IT spend up to
40 percent less than the weakest performers.
We discovered that the best performers were separated from the rest by fewer
than 20 statistically meaningful variables associated with two factors: the
quality of a bank's IT management and the ways the bank uses IT to support the
needs of the business. There was no correlation between the performance of a
bank and either its size (as measured by revenues or head counts) or its mix of
retail and wholesale business. Taken together, these results strongly suggest
that the way banks use and manage IT will continue to be a crucial factor in
their performance.
Source: McKinsey Quarterly
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