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UK plc wastes £17bn a year on IT

Because managers are idiots

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UK businesses are wasting £17 billion a year through IT expenditure because managers haven't bothered to apply proper asset management concepts, says a new report by KPMG.

An initial estimate of the money being wasted - based on a similar report in the US - was £11 billion; however KPMG was so amazed at UK managers' ignorance that it upped the figure to £17 billion.

On average, businesses fail to save between 10 and 40 per cent of their IT spend thanks to poor procurement and asset management. By "procurement" KPMG means buying new kit, by "asset management" it means making sure you know what you've got and that it's what you need. The main findings of the report were:

  • Just under half of respondents didn't know what their IT budget was
  • Over 80 per cent had no idea what their cost savings from IT asset management was
  • Over half of companies don't intend to use asset management for IT

Why is this?

  • People buy PCs, software etc from a budget other than the official IT budget. They do this because either they don't know better or don't have time to ponce around with the IT department. Subsequently, the IT department has no real idea what's going on. And of course bulk-buying discounts go out the window.
  • Lack of accountability. There is hardly ever one person directly responsible for all IT in a company. Hence cost-saving opportunities are lost and the same software is bought over and over again.
  • A bureaucratic buying system means that people find it difficult to get what they want - very rarely to the benefit of the company's finances.
  • The Board doesn't have a clue about IT procurement. As such IT is seen as a cost, but rarely is it looked at as an ongoing form of assets like stocks and shares for example.

And all this results in huge over-payment for IT goods, something that KPMG feels is in the interest of companies to get right.



The report also comes up with rare glimpses of humour, which we rather like. One example given says: "While assisting a technology company it became quite clear that whilst they thought they had somewhere between 900 and 1200 PCs and about 8 servers running only Microsoft software. They actually had 1400 PCs, 5 servers and enough different software to stock a branch of PC World, not to mention a soft porn collection on one of the IS/IT servers."

Another: "A large organisation bought copies of MS Project for each individual on the team each time a new project was started, and then forgot about them when the project was completed. Given that the organisation was running some sixty projects a year, with a hundred people in each team, their unnecessary costs were huge."

Clearly someone at KPMG was enjoying him or her self. ®

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