A small number of European banks get more business value from information technology—including faster, more flexible support of business objectives—than do their peers, and at a far lower cost. How? Our research found that this select group combines superior IT management with a tight focus on using IT to help improve business performance.

We surveyed 37 retail and wholesale banks to understand how they manage technology and to identify the IT-management practices of the top performers. In the course of the effort, more than 70 variables of management practice—ranging from the management of data centers and application portfolios to IT governance models and outsourcing contract provisions—were examined. We collected quantitative and qualitative data on the banks' IT spending and on their staffing levels for internal personnel and contractors.

The survey found that IT spending varied widely—from 10 to 30 percent of operating costs, or 4 to 18 percent of operating income. Higher levels of IT spending didn't increase the effectiveness or efficiency of the business. Indeed, the banks that appear to get the most business value from IT spend up to 40 percent less than the weakest performers.

We discovered that the best performers were separated from the rest by...