Information technology consumes a significant chunk of most companies’ budgets. Last year, the top 20 clients of The Boston Consulting Group devoted an average of $800 million to IT, or 5 to 8 percent of their total expenditures. Companies in technology-heavy industries, such as banking, telecom, and pharmaceuticals, spent well above that.

Part of this spending represents value added: companies are finding increasingly innovative and effective ways to use IT. But much is wasted as a result of several critical dysfunctions that plague the IT organization and management of most companies.

To steer clear of this morass, companies must break down IT spending into functional categories, employ highly focused benchmarking, and design a rigorous blueprint for change. BCG’s experience shows that this approach, which the firm has introduced to a range of companies, can result in savings of up to 45 percent.