Numara Software, a provider of service management and asset management solutions, is about to release the findings of its study into the state of IT funding in the UK, Germany, and France, and the consequences of the lack of IT investment during the last few years. The results of this study, entitled “Rebirth of the IT budget” and based on the responses of 300 senior IT decision-makers (none of which are Numara customers), indicate that IT managers are now fighting back, demanding more funds and resources to support the continued provision of quality IT services.
82% of IT managers have seen IT funding affected in some way during the last two years
The recent corporate focus on IT costs and value was inevitable given the growing total cost of IT provision. However, with such a large proportion of IT spend being on “keeping the lights on” activities, many IT organizations are vulnerable to ever-increasing budget cuts. Not unsurprisingly, 52% of respondents state that the financial value of their IT budget has been affected, whether frozen (18%) or, more commonly, reduced (34%). But the decision-making process has also changed for 52% of companies, with 27% saying that it has slowed and another 25% saying more senior people are involved in the sign-off process.
Looking forward, however, the majority of the senior IT professionals surveyed expect things to improve – 15% in mid-2010, 45% by the end of 2010, and 29% in 2011 or beyond. While this might appear somewhat optimistic, 63% of respondents are concerned that the business has become accustomed to the slashing of IT budgets and that if not challenged the practice will continue for years to come.
In our opinion, much of this is to do with the focus on what IT costs rather than the value that it delivers to the business. While the business continues to see IT purely from a cost perspective, it will remain at risk from progressive corporate budget cuts. To address this, IT organizations need to better understand and communicate how individual IT services deliver value to the business and how decreasing IT expenditure will ultimately affect business services. But before they can do this, they need to understand the IT assets employed and how their usage drives both cost and IT service delivery.
92% of enterprises feel under some sort of pressure in relation to asset tracking
The most common pressure is being able to resolve users’ technical issues in line with agreed SLA targets. This is followed by keeping track of IT assets in an ever-changing IT landscape. While not discounting the importance of the former, the latter point is critical for IT organizations on the back of the ever-increasing focus on what IT costs. In our opinion, there are a variety of opportunities for enterprises to gain a better understanding of the assets employed and then use this information for short-term rationalization exercises of hardware, software, applications, and even IT services before creating a longer-term platform for both application and service portfolio management. Asset tracking and service costing will both be key to this.
61% of IT decision-makers consider software maintenance costs to be a burden on their IT budget
Additionally, 40% describe this burden as significant, with 45% describing software maintenance contracts as a necessary evil. There is no doubt that software costs (both initial purchase and maintenance) are a large part of total IT expenditure these days; in fact many IT organizations do not truly appreciate how great a cost this is. Software asset management is a key activity here – not only understanding the licensing position in respect of the installed software base, but gaining an understanding of how software is used to make better use of agreed licensing terms and identifying opportunities to reclaim unused or underused licenses for use elsewhere. From a software maintenance perspective, SaaS-delivery options can help. In the case of IT service management tools, SaaS vendors will often state that the annual subscription charge for everything involved in delivering IT service management capabilities (including the infrastructure) is not dissimilar to the annual support and maintenance charges levied on traditional on-premise tools.
Originally published at http://www.ovum.com/news/euronews.asp?id=8726