Poor IT purchase planning 'wastes $500bn worldwide'

10 April 2002
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11 April 2002 | Robin Parker

Businesses worldwide wasted more than $500 billion through poorly planned IT purchases last year, says a leading analyst.

Poor forecasting and a reluctance to abandon failing projects wastes a fifth of firms' IT budgets, says a study of IT patterns across Gartner's global database of 11,500 organisations.

Gartner found that many businesses lack the tools to compare different purchasing and licensing options and often have several overlapping agreements.

It argues that in trying to be competitive in e-business, many firms that were traditionally cautious about IT projects have risked purchases with increasingly uncertain business cases.

Andy Kyte, research vice-president at Gartner, said that as e-business projects become more complex, purchasers will increasingly be asked to curb waste. "Every purchase needs specialised, professional negotiating skills for the licensing, maintenance and management of intellectual property rights," he said. "Businesses should be looking to marry these skills with technical IT skills."

Gartner says firms too often overspecify software licences and hardware acquisitions, and that products are often not used to their full potential. It advises companies to prioritise IT investment and monitor projects and the external market.

Kyte said firms should reward managers for abandoning projects that will not deliver their expected benefits. "Killing a project is not a badge of shame," he said. "If you're not prepared for failure, you shouldn't play with innovative ideas."

• Only a quarter of large companies will purchase procurement or supply chain applications this year, compared with 58 per cent last year, according to a study by Forrester Research.

Average e-business technology budgets are down by nearly a third to $29 million, the survey of 900 decision-makers reveals.

SMapr2002

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