Businesses pour money down the IT drain

Businesses are wasting $500 billion on Information Communication Technology (ICT) according to Gartner Group.

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By  Neil Denslow Published  March 18, 2002

Businesses are wasting $500 billion on Information Communication Technology (ICT) according to Gartner Group. Over $2.7 trillion was spent on ICT last year with the analyst house estimating that 20% of this was spent on projects that failed to meet their specified targets.

Gartner identified a number of key areas where misspending occurred. Of particular note was “over specified” hardware and network infrastructure, which was too advanced for a company’s needs. Unnecessary customisation of software packages and poor central control of software licensing also added to costs, as did projects that simply never reached fruition.

The analyst house believes that these failings have resulted in IT directors and business manager losing confidence in their ability to select and implement projects that will deliver business benefits.

To redress this problem, Gartner argues that companies need to “kill projects early and often.” This, however, will require a change in management culture so that managers feel they will be rewarded for recognising projects that are destined to fail. Companies also need to adjust their IT investment behaviour by addressing inappropriate procedures and prioritising ICT investment to meet current business goals.

Andy Kyte, Gartner research vice president, suggests these changes will also affect IT vendors. “Economic recovery can not be guaranteed to re-ignite IT spending because companies will get smarter with their investments in the future. As a consequence, IT vendors will see margins squeezed as IT buyers get better at rightsizing their purchasing decisions,” he says.

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