ECONOMIES OF SCALE IN ICT

This study offers new insight into the economies of scale of ICT departments. Drawing from data on Housing Corporations, Municipalities and Hospitals, evidence was found that particularly infrastructure-related investments leverage a more efficient use of ICT resources. The measured economies between low and high infrastructure spending organizations are on average more than 20% for their operational ICT labour and for their total ICT costs. It was also found that organizations should spend a certain minimum of their ICT expenditure on applications to realize economies of scale in their business processes. These findings are particularly interesting for ICT managers and CIO''s in relatively low ICT spending organizations, to attain an optimal balance in investments in infrastructure and applications.