FDs miss out on £17bn IT savings

Most organisations don’t know what IT assets they have, according to research by KPMG. Technology is often purchased from different budgets outside IT, so no one has an overall picture.

A survey of 200 finance directors and managing directors found that half did not know what their current IT budget was, and half had no plans to produce an IT asset management policy.

The firm found uncoordinated purchasing in one company had led to three email systems being installed, which were not linked together. But KPMG says savings can be made.

One investment bank said it could easily save Pounds 20m by managing its assets better, but said it was a low priority because no board-level policy had been agreed. KPMG says costs can be cut through bulk purchasing rather than shopping around with multiple vendors, tight controls on software licences, and centralised software distribution via intranet.

Meanwhile, a separate survey has found that purchasing and supply chain software is still worth investing in, despite the fragile state of some suppliers.

Spending on sourcing and direct purchase software will grow by 71% and 62% respectively, with global spend rising to $2.8bn (Pounds 1.93bn) and $2.3bn (Pounds 1.59bn) by 2005, according to AMR Research.

Systems for managing the flow of goods into a company’s production cycle come in many flavours: purchasing software for automating transactions, sourcing software to locate the cheapest supplier and arrange the deal, and outsourcing the entire operation to a service supplier.

Some suppliers cross over, for example Clarus builds purchasing software and deals with sourcing software. But typically SAP, Commerce One, Ariba, and Oracle build purchasing software while i2, Moai and Healy Hudson deal with sourcing software, and FreeMarkets, eBreviate and Goodex provide outsourced services.

The fragmented state of the market can make it difficult to decide which is the most cost-effective vendor. But analysts believe there will be a shakeout over the next two years with just a few big names providing the whole range of capabilities.


Businesses failing to manage IT assets

  • Steve Ranger and Andy McCue write for Computing.

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