UK 'wastes £23bn a year on IT'

The company says that at least 20 per cent of IT budgets are wasted, and Andy Kyte, Gartner research director warned: ‘The response we get from IT directors is overwhelmingly that 20 per cent is an underestimate.’

The UK spent $160bn on IT last year, according to Gartner.

Typical areas of misspending include over-specified hardware and network infrastructure, unnecessary customisation of software packages, poor control of software licensing, and the failure of ebusiness projects.

‘There’s a common tendency in large organisations to size desktop platforms to the highest common denominator. Because a small number of people need access to fast machines with lots of memory, a lot of companies will, in order to simplify systems management, give everyone the same,’ said Kyte.

‘So most people will only be using five to ten per cent of the power of a machine loaded with software licences they don’t exploit.’

Another area where unnecessary cost had been built up is in customising enterprise resource planning systems.

‘Customisation hasn’t delivered the added business value,’ he said. ‘They should have changed the business processes and many will now do that.

‘In retrospect our research shows that many of the business managers that made the customisation decisions now say they could have got what they needed out of the standard package.’

Ebusinesses also account for unnecessary expenditure. ‘A lot of businesses decided they would try to manage their ebusiness infrastructure in-house. They expected it to generate millions of hits and they needed 24-hour access, so they set up server farms with lots of redundancy,’ said Kyte.

But few sites got the traffic they expected, and ‘they have all that software sitting there and all those disks spinning.’

IT directors are in a bind, according to Kyte. ‘They’ve got to save money from the IT budget, but they also have to deliver change to enable business managers to run lower-cost operations.’

Gartner recommends that companies use this year to rethink their IT investment behaviour. Companies should encourage managers to kill projects that are not delivering business benefits, and prioritise IT investment in line with business goals.