While worldwide spending on information communication technology totaled $2.7 trillion in 2001, 20 percent of information technology budgets were wasted on purchases that failed to achieve corporate objectives, says Gartner Inc. Typical areas of misspending include unnecessary customization of software packages, poor central control of software licensing and projects that never come to fruition, which was especially true during the period of e- business “hype,” Gartner notes. Though Gartner says global wasted spending reached approximately $500 billion last year, the firm adds that many chief information officers and chief financial officers consider that to be a conservative estimate.
To rectify the situation, Gartner says companies need to “kill projects early and often” and instill a culture of rewarding managers for recognizing projects that are not going to deliver business benefits. In addition, firms should prioritize ICT investments in line with business goals and restructure IT investment processes to continuously re-evaluate the viability and value of IT projects, Gartner adds.
“Although IT remains of critical strategic and tactical importance, businesses are learning to right size’ their IT spending,” says Andy Kyte, Gartner research vice president. “Economic recovery can not be guaranteed to re- ignite IT spending because companies will get smart 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.”
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