J.C. Penney's new COO Michael Kramer complained to Wall Street recently that he discovered the company runs 492 applications, 88 percent of which are custom. He thinks it should be running about 100 apps, total. "It's a mess," he said. The troubled retailer, which lost $152 million last year on sales of $17 billion, plans to simplify IT as part of a massive transformation project. "When you want to make a change in the business, it takes a lot of un-layering and putting back on," Kramer said. "That costs money."

According to The Hackett Group, typical companies run more than twice as many data centers as world-class companies, which Hackett defines as those with IT groups in the top 25 percent for both efficiency and effectiveness. Typical companies also run an average of 39 applications for every 1,000 end users, compared to just 20 at high-performing companies. As a result, the best-run IT groups deliver services 15 percent more cheaply than typical companies.

"Less complexity has material benefits to the business, not just a positive effect on IT spending," says Rich Pople, global IT practice leader at The Hackett Group.

For example, vigilantly guarding against complexity paid off for some high performers when the recession hit in 2009, Pople says. During that dark time, typical companies by an average of 6 percent, mainly by stopping new projects and slashing end-user support.

Elite companies, however, reduced IT spending more--by 9 percent--mainly by retiring legacy systems and simplifying their technology environments. At the same time, they kept application development going, introducing new features for employees and customers and watching low-performing competitors tread water on last year's capabilities, he says. "These companies were in a better position to grow."