German companies invest approximately 3% of their annual turnover in IT. Just under half of this amount (46%) goes toward operating and maintaining IT systems. CIO magazine reported these figures in an article titled “IT Budgets in Benchmarking,” citing the Forrester report “2017 Tech Budgets Benchmarks.”

For example, a company with a half-billion-euro turnover would spend around seven million euros on operating and maintaining IT systems. With this volume, a conservative estimate suggests a potential six-figure reduction in system costs.

Cost savings are not always the main reason.

According to a study by Six Sigma Germany, three-quarters of Six Sigma projects achieved savings of more than €50,000, with some projects saving up to half a million euros. However, the main reasons for implementing Six Sigma projects are increasing customer satisfaction and improving service, or quality.

Therefore, the potential lies not only in increasing efficiency, but also in improving quality. Both have a positive effect on business operations, employees, and customers.

According to a recent Capgemini study on “IT-Budgets 2019,” 23% of respondents said that increasing efficiency and reducing costs are the most important IT requirements.

We define system costs as those incurred in providing and maintaining an IT system or application. In addition to infrastructure and licensing costs (hardware and software), these costs largely consist of labor costs for internal and external employees.

The aforementioned company has approximately 4,000 employees and 40 IT applications that support business processes. At this scale, the potential reduction in system costs for the operational IT areas of operations and support is conservatively estimated at 10-25%.

How to Recognize Potential in Your Company:

Compare similar IT applications and establish an internal benchmark.

The reference value does not have to be system costs. For example, you can use the number of support tickets or working hours per month. It is important that the IT applications are comparable in terms of the number of servers, users, interfaces, and supported business processes.

This benchmarking provides input for the continuous improvement process (CIP) in the IT department. The CIP must be operational and budgeted for on an ongoing basis to ensure long-term efficiency.