Firms are wasting cash on complex IT

By Rick Pendrous

- Last updated on GMT

Related tags Cost Economics

Companies need to pay more attention to IT budgeting
Companies need to pay more attention to IT budgeting
Half of UK businesses are wasting thousands of pounds on IT support when they could be spending less by streamlining their systems for business advantage, according to a enterprise resource planning (ERP) systems specialist.

K3 Managed Services, a UK Microsoft channel partner, which focuses primarily on the retail, manufacturing and distribution sectors, has come to this conclusion and argues that budgeting for IT is something that requires a lot more attention than companies currently dedicate to the process.

Instead of constantly paying money to cover maintenance costs, businesses would be better placed to put in place a solid IT system that can run reliably, says K3.

In the latest Business of IT Guide published by K3, it suggests that 50% of businesses add more to their IT systems than is necessary, making for a complex environment that is expensive to support. It reminds directors of the importance of strategic IT budgeting and states that reducing the complexity of IT mitigates the risk of overspending and wasting money on maintaining over complex, yet inefficient systems.

According to research firm Forrester, companies are starting to invest more in IT innovation. K3 points to the Forrsights software survey from Forrester for last year, which revealed that 12% of businesses planned to increase their software budgets by more than 10% in 2011 and a further 10% by between five and 10%. However, K3 has found that over half of companies' total IT expenditure is being spent solely on maintaining systems, with just 24% of the budget spent on IT innovation. K3 argues that IT spending must be aligned with new technologies, sustainability and ultimately, moving a business forward.

The expansion of IT systems to support existing software has many hidden costs, it claims, including the energy required to power extra servers and devices. Analyst Gartner predicts that by the end of the year, the cost of power and cooling will surpass the cost of hardware. Reducing energy goes hand-in-hand with simplifying the complexity of your IT, claimed K3.

Jason Price, head of sales at K3 Managed Services said: "Businesses are still in the habit of spending money on additional hardware to support existing IT systems, instead of streamlining their IT and freeing up funds for IT innovation.

"It is not a case of bigger is better. Often smaller, streamlined IT systems work better than those that rely on multiple hardware. The key is managing your IT budget to accommodate IT innovation and implementing that budget for business advantage."

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