Failure to optimise technology costing European enterprises over £2 million

According to the research, the technology spending initiatives of European enterprises are being held back by investing more than necessary in software licensing, with the average spend in this area being enough to pay the wages of 45 skilled IT specialists.

With 95% of European companies revealed to be under pressure to reduce costs during the ongoing pandemic, 51% of organisations have downsized their workforce since March 2020, while over a quarter (27%) have specifically downsized its IT staff.

44% said they are sweating IT assets longer than before the pandemic took hold, and 34% are consolidating physical office facilities, but despite these findings, firms are failing to fully optimise IT costs.

Room for optimisation

While investment in areas such as software, IT support and infrastructure has increased since March 2020, the majority of IT teams said these investments weren’t as strategic as they should be.

50% of IT teams said they need to optimise their IT support investment, with particularly identified areas of tech including infrastructure as a service (68%), private cloud (60%) and software (50%).

Additionally, 66% of organisations admitted to having a large amount of duplicate hardware and software, due to needing new technology at the beginning of lockdown, while 63% cannot scale their software licenses to the number of employees they have.

Will cloud optimisation control spiralling IT budgets in the post COVID-19 era?

As budget costs spiral out of control due to the pandemic, Rackspace research suggests cloud optimisation could help control the spend. Read here

“IT departments need to make savings, but equally there’s a very fine line to walk between cutting costs and reducing the ability to operate,” said Emma de Sousa, senior vice-president EMEA at Insight.

“Organisations have been struggling to address systemic challenges around cost management for several years. If they double down on their cost optimisation efforts, they could avoid making decisions that will almost certainly impact their ability to execute digital transformation plans.

“There are countless opportunities for organisations to optimise their costs and save money without harming their ability to operate effectively.”

Further findings from the Insight research include:

  • Lack of skills: 73% of enterprises cannot negotiate effectively with software vendors, while 56% think they are over-spending on licensing but cannot confirm their belief and begin to correct the issue.
  • Lack of visibility: £1.03 million in cloud service costs is coming from unexpected purchases by other departments, while 55% of organisations have multiple contracts for the same software because it was bought by different business units at different times.
  • IT investment slowing: IT budgets only increased by 1.64% over the last 12 months, compared to pre-pandemic predictions of 3.4%.
  • Room for consolidation: 73% of organisations are using multiple applications that have the same functionality, but are used by different teams in different situations, while 63% have not consolidated their IT infrastructure since March 2020.

Which departments should be prioritised for digital transformation?

When undergoing digital transformation, should certain departments within an organisation be prioritised over others? Read here

“The challenges we’ve faced so far in 2020 are in no way over, and IT departments have a key role in supporting their organisations,” continued de Sousa.

“Cost optimisation isn’t easy and often requires specialist skills and knowledge, but now is the time to eradicate waste and drive more efficient operations.

“By doing this, organisations will be better placed to ensure the enterprise is resilient enough to survive and even thrive, whatever the future brings.”

Insight, alongside Coleman Parkes, surveyed 550 senior IT decision makers in enterprises with over 500 employees, across the UK, France, DACH, Italy, Spain, Belgium and the Netherlands in Q3 2020.

Avatar photo

Aaron Hurst

Aaron Hurst is Information Age's senior reporter, providing news and features around the hottest trends across the tech industry.