Blog 30% of IT investments is waste: how to optimise your assets & budgets?
By Insight Editor / 17 May 2023
By Insight Editor / 17 May 2023
In recent years, most organisations have significantly invested in IT and software. Now, of course, those companies want to generate value from those investments. Purchasing technology is often not enough to drive better outcomes; the key is in optimising your tools and assets. Analysts agree that, on average, about 30% of a company’s software investments result in waste. This means the business is spending money for which it receives no return. Imagine how your IT budgets would increase if you could avoid or recover all those redundant costs.
Another way to optimise your IT spending is better risk management. When a software vendor conducts an audit to verify if a customer is using the software according to the correct licensing-rules and boundaries they use, it often leads to unpleasant surprises, with unexpected costs of up to several million euros. Most organisations do not do this intentionally; the rules and their own IT landscape have become so complex that they need proper processes and governance. Moreover, companies should base their decision to buy software on information about their real needs, not on a software vendor’s strong sales pitch.
To reduce costs and improve risk management, many companies are looking to improve their Software Asset Management (SAM). In the Magic Quadrant for Software Asset Management Managed Services, Gartner predicts that by 2025, 40% of organisations will use third-party SAM services for (part of) their increasingly complex software estate. Software Asset Management should encompass the entire technology lifecycle: from software acquisition to management and expansion. Ultimately, it will enable you to bring down costs, mitigate risks and have a more informed base for decision-making.
Managing your assets is only one part of the strategy. You also want to optimise your technology stack. Think about improving your contracts and licenses to better align them with your needs. Another way to optimise your assets is to make sure you use them only when needed. Compare it to turning off the lights when you leave a room. A server in the cloud may be vital for the duration of a project, but you want to turn it off when the project is over.
The same goes for new tools. In the past, most purchases went through the procurement department, but the explosion of SaaS solutions has made that impossible. Departments and teams are now often acquiring tools for just a handful of users. If an organisation can get these expenses under control, there are many gains to be made.
Finally, companies need to simplify their IT environment by asking themselves whether they still need all the technology in their stack. About 80% of an organisation’s IT spending typically goes to four or five of the largest vendors. The other 20% can be divided among hundreds of smaller vendors that are often used once or twice a year. Perhaps you can eliminate some of these technologies and vendors to lower your costs? Reducing your IT estate’s complexity is also important for cybersecurity.
As mentioned above, many companies turn to third parties for software asset management. This can be valuable for organisations of all sizes. On the one hand, big enterprises usually have someone responsible for SAM, but that person often has too little time to generate real business value. Smaller companies, on the other hand, do not even have this software asset manager. Instead, the role is passed on to people like the IT manager, procurement manager or finance manager.
Meanwhile, some vendors sell tools that claim to magically solve all problems by inventorying the software in a company. However, you still need someone who is able to handle these solutions. If you put a jackhammer in the hands of a person who is not trained to use it, the results are likely to be poor and even dangerous. Fortunately, an experienced partner knows how to use such a jackhammer to tear down all the unnecessary walls of your IT fortress and maximise the value from your investments.
After all, how great would it be if you could save 30% of your costs without jeopardising the business?