Study: IT mismanagement costs U.K. businesses billions

U.K. companies could be wasting as much as 17 billion pounds (US$25 billion) a year due to mismanagement and misunderstanding of their IT assets, according to a study published Thursday by KPMG.

About half of the managers at U.K. firms don't know what their annual IT budget is and 80 percent have no clue what, if any, cost savings they are making from management of IT assets, according to KPMG. The professional services firm surveyed 200 finance directors, managing directors and other senior staff in June.

Studies in the U.S. by researchers Gartner Inc. and Meta Group Inc. have shown that between 10 percent and 40 percent of IT costs can be saved by effective procurement of IT, according to KPMG. With annual IT spend of 43 billion pounds, wastage could be as much as 17 billion pounds, the study said.

U.K. businesses miss out on the savings because of "renegade" purchasing outside the budget, lack of managerial accountability for the area, bureaucratic and complex procurement processes and failure to consider the issue at board level, KPMG said. Only 3 percent of firms are achieving substantial savings through good practice, according to KPMG.

To turn this situation around, KPMG advises companies to list all IT assets and determine if they are all necessary and licensed, then appoint a senior manager to be responsible for IT asset management and licensing matters. Buying of IT should go through one or two suppliers, to benefit from better service and bulk-buying savings, KPMG said.

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