Study of cost management and IT in Swiss enterprises

Short description

Growing costs of IT-projects in enterprises lead to a request of an efficient and sustainable IT- cost management. IT- cost management was the subject of a doctoral thesis. This project was concerned with the approaches of value-based management as a base to determine the value of the information technology. The identification and analysis of factors that drive costs required new instruments of IT management to record the specific characteristics of IT.

Research design

The availability of representative empirical studies defining controlling and IT-cost management in the German-speaking area is very low. The Institute of Accounting and Controlling and the Institute of Information Systems from the University of Bern conducted a comprehensive survey (Omnibus-survey) together with Pricewaterhouse Coopers (PwC) on cost management and information technology in Swiss enterprises.

After an extensive pretest phase based on expert interviews, the questionnaires were sent to 3024 enterprises. In order to get a larger sample and to prevent a non-response bias, the questionnaires were sent a second time to the companies who did not respond. There was no significant differences between the firms who responded after the first request and the firms who responded after the second request. This is a scientifically recognized sign that the sample represents the population. The data gathering produced a sample of 539 questionnaires. This corresponds to a response rate of 18%. In comparison to other studies (national and international) the response rate was higher.

Part of costs for IT-projects

If the cost level is high and composition of IT cost is opaque, the economic efficiency of information technology is questioned. The message of the IT costs is ambiguous: If IT costs are low, it can be positive when the economic efficiency is high. On the other hand, it can be that important investments in modern IT infrastructure are neglected. The latter can determine that a firm loses competitiveness sooner or later and that huge investments into a fundamental renewal of IT infrastructure have to be made.

In order to get an IT cost overview across all sectors, the part of IT-costs in relation to total cost was interrogated: (cf. picture 1)

Independent of the size of a firm, IT costs of over 50% of enterprises are between 1 and 5%. The share of IT costs is lower than expected. This is especially surprising as in high-wage-countries like Switzerland companies should automate business processes in order to be successful in global competition. Additionally it has to be bore in mind that many companies lowered IT costs because of cost-saving measures. These circumstances lead to an investment delay in information technology. This may, in turn, lead to rising IT costs in the future.