80% of IT investments dead money, says Gartner

Posted by Wolfgang Gruener

The lion's share of investments into IT is not contributing to an organization's growth, according to a report released today by Gartner. The market research firm claims that eight out of ten dollars that companies spend on IT is "dead money".

"We say 'dead money' because, while it is keeping the lights on, it isn't directly contributing to your business growth or enhancing your competitive advantage," said Daryl Plummer, managing vice president and Gartner Fellow. "In today's environment, any corporate function that doesn't contribute to growth or competitiveness is ultimately expendable."

Accoding to Gartner, at least two-thirds of all IT spending is related to just sustaining the existing business, not to change or transform it. The investments allocated to change the business are 20% or less, the firm said. "The challenge for IT leaders is to get their budget from 80% 'keeping the lights on' to 60% or less, so they can use that money in new ways to drive growth," Gartner wrote in a statement.

"It's imperative that IT leaders take the initiative to start spending their IT money differently," said Audrey Apfel, vice president at Gartner, in a prepared statement. "IT leaders need to think differently about how to make the right investment decisions and to measure their value."