AI is intensifying a tension CIOs have managed for years: how to allocate spending to keep systems running while still creating room for change and innovation. A McKinsey analysis conducted with Serviceware shows that most organizations are already operating at the edge of their change capacity. Large companies were surveyed about their technology spending patterns and were grouped into four IT archetypes. Deliberate modernizers are the best positioned to capture maximum value from their enterprise technology investments, note McKinsey’s Leandro Santos, Thomas Elsner, and Ishaan Sharma. They spread their change investments consistently across all major IT towers and keep their budgets allocated to run-based infrastructure at least 20 percent lower than other organizations.
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Four Sankey diagrams compare how different IT archetypes allocate technology budgets between “run” activities (maintaining existing systems) and “change” activities (modernization and new capabilities) across six technology towers: applications, infrastructure, end-user services, IT management, cybersecurity, and data analytics.
Top left: “Lean operators” allocate 87% of IT budgets to run and 13% to change. Most spending is concentrated in applications and infrastructure run costs, with relatively thin flows toward change initiatives.
Top right: “Deliberate modernizers” allocate 63% to run and 37% to change—the highest change share among the four archetypes. Thick blue flows show substantial modernization investment across every tower, especially applications and infrastructure.
Bottom left: “Heavy IT sustainers” allocate 80% to run and 20% to change. Spending remains heavily weighted toward maintaining applications and infrastructure, with limited transformation investment elsewhere.
Bottom right: “Strained transformers” allocate 66% to run and 34% to change. Change investment is relatively high, but large run-cost burdens in applications and infrastructure remain.
Across all archetypes, applications and infrastructure account for the largest portions of both run and change spending. The key takeaway is that deliberate modernizers shift significantly more budget toward modernization and transformation efforts across all technology domains than the other groups. Source: McKinsey analysis of survey responses from 17 global companies across multiple industries
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Source: McKinsey Panorama Global Banking Pools.
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