UK companies are wasting as much as £17 billion annually by
failing to manage IT hardware and software, according to a KPMG
study published today. The accountancy firm’s survey of directors
and senior managers across UK business found that almost half have
absolutely no idea how much their annual IT budget is.
As many as 80% do not know what (if any) cost savings they are
making from management of IT assets. With an annual IT spend of £43
billion by UK businesses, KPMG puts potential wastage at up to
£17bn - half what the Government takes in Corporation Tax.
Recent estimates from the US suggest that between 10% and 40% of
overall IT costs can be saved by effective procurement and
management of hardware and software.
Reasons identified by KPMG for the current waste include:-
- "Renegade" purchasing outside the authorised IT budget;
- Lack of any managerial accountability for the area;
- Bureaucratic and complex procurement processes; and
- Failure to consider the question at Board level.
The survey did show, however, that a small number of aware firms
(3%) are achieving substantial savings through good practice. Paul
Diamond , Director of Information Risk Management at KPMG,
identified a few steps that organisations can take to gain some
control over their IT budgets:
- Make a list of all the hardware and software in the
organisation - is it all really necessary and is it all
licensed?
- Appoint a senior manager who will have authority over all IT
asset management and licensing matters, be accountable directly to
the Board and be rewarded in terms of cost savings achieved.
- Appoint one or two trusted suppliers and insist that all IT
purchasing goes through them. As well as bulk-buying savings, they
will be able to help in the key areas of preventing over-purchasing
and sorting out correct software licenses.
- Have mechanisms in place to pro-actively manage this area,
including those assets which are bought outside of the “trusted
suppliers” route.
A 6-page
executive summary can be downloaded in PDF format from KPMG’s
site.
