Over the last ten years enterprises worldwide have transformed the way they do business by investing trillions of dollars in IT. They’ve expanded their marketplace reach while working more closely with customers and suppliers. The most innovative of these companies have created a substantial competitive advantage in the marketplace.

Paradoxically, while IT investment has been repaid many times over in accelerated times to market, improved customer relationships and faster supply chains, it has precipitated an exponential growth in IT assets that threatens future gains. The proliferation of assets has increased the complexity of the IT environment, raising operational and administrative costs and reducing infrastructure productivity.

These three trends are seriously constraining the ability of CIOs to deliver new applications, support business expansion and align IT with overall business strategy. There is increasing concern that IT investment is approaching the point of diminishing marginal returns.

This concern is justified. Rising operational expenses threaten to completely overtake IT budgets. In just eight short years, operational labor expense has risen from less than 40 percent of IT labor budgets to nearly 70 percent.1 With application development labor being squeezed out, CIOs are under increasing pressure to justify their budgets.

The question confronted by those companies that have leveraged IT to secure a competitive advantage is how to make their competitive advantage sustainable. This white paper highlights the costs of IT asset proliferation and the advantages of the IBM view of IT optimization as a strategic, ongoing process. It describes the holistic and practical IBM approach and shows how it is helping organizations realize greater initial savings and higher returns going forward.