The State Of IT Governance And Sourcing In North American Enterprises

IT spending in North American enterprises will remain constant at 4% to 5% of total company revenue. However, spending on new investments (versus ongoing operations and maintenance) increased from 20% in November 2005 to 24% in 2006. Looking at IT governance, we see that, structurally and functionally, North American IT is increasingly centralized. Seventy-two percent of North American enterprises report to a single IT leader (up from 59% in 2005), who then reports to the senior business leader in a third of organizations. Similarly, nearly half of all North American enterprises have a centralized vendor management group responsible for the management of system and services vendors. Interest in services remains high, with the largest firms showing the highest demand. Outsourcing in particular continues to grow, with software development the most likely to be outsourced. Of those currently outsourcing, the highest percentage (approximately half) reports that the cost and inflexibility of outsourcing relationships are the biggest challenges. Even with these concerns, though, more than a third consider IT outsourcing or business process outsourcing (BPO) critical to their company's overall strategy.