Firms wasting billions on unnecessary IT

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Firms wasting billions on unnecessary IT

Gartner calls for curb on spending that does not help core business.

Billions of pounds is being squandered globally by businesses purchasing IT equipment and services which they simply do not need, a senior Gartner executive has warned.

Ian Keene, research vice president at the analyst firm, said that wasting money on unnecessary technology equipment and services is the norm, rather than the exception, for firms across the globe.

"The majority of businesses out there are wasting money on technologies that they should not buy," Keene warned at the recent NetEvents symposium in Evian.

"They are wasting money on expensive telecoms services they do not need and, because they are spending all that effort and budget and resource on those, when it actually comes to doing something that includes the productivity of the company, they have to spend money on outsourcing to get it done. It is waste all the way through."

Keene went on to argue that companies should focus on adding value to their business processes.

"They should look at the business process, and what they have to do with networking and telecoms to improve that process. But they are not," he said.

"They tend to be in their own little bubble, building networks for the sake of building networks and using the same design methodology they have been using for the past 10 years. That is where the money is going and that is why we consider it a waste."

Keene believes that, instead of throwing money at IT, firms should be building networks and infrastructures that enable competitive advantage.

"It is pretty obvious, but it does not happen. The networking people just get on with their own thing and the people looking at how to improve the competitiveness of the company are somewhere else and these guys just do not talk enough," he asserted.

"So what are companies doing instead of doing the right thing? Out-dated design practices. They are not taking advantage of any new technologies that are coming along to actually change the way they design networks. They are buying technology and services that are not needed."

Gartner's research identified one "typical example" of unnecessary technology spending as the over-provisioning of network bandwidth to corporate desktops.

For most corporate users 10Mbps is adequate for the applications they need, but the analyst firm claimed that companies are routinely installing Lan switches that provision Gigabit bandwidths and Power over Ethernet to the desktop.

"This is not needed in many cases. So, from a simple solution to a complex one, it costs money and it is not needed," Keene argued.

"It is basically the guy who has made that buying decision saying 'I had better protect myself. Maybe we might need it some time in the future so let's invest the money now. I have got the budget.' And that budget should have been spent on something else."

Another investment focus identified by Gartner as a potential waste of money is Voice over IP screen phones. Keene explained that firms feel forced by vendor or peer pressure to roll out Voice over IP.

"Everyone is doing Voice over IP now. But what they do is use the same design methodology as they did when they put in the old traditional PBX. Put in an IP PBX and you have a nice shiny really smart looking IP screen phone via the desktop," he said.

"Proprietary software is very expensive. Zillions of features that no-one will ever use and people have to go on a training course to work out how to use this phone. More time and money spent.

"And nine times out of 10, next to that shiny new IP screen phone there is something called a PC with much more processing power. It can do the job plus loads of other tasks but it is not being used for that purpose.

"Instead that business should invest the same amount of money in unified communications to enable new business processes. Buy a real cheap IP handset or a softphone on the PC, and save money. That shiny new proprietary IP screen phone is not needed."

Throwing expensive bandwidth at network performance problems is also very common, according to Keene.

"The company has a problem and people complain that applications are not running fast enough, so they get a bigger, fatter pipe. They don't consider that it is a latency problem somewhere," he said.

"Maybe we can use some of these new devices on the market to optimise that expensive wide area network bandwidth more. No, they just throw bandwidth at the problem. It costs money."

One area of investment that is often overlooked is application performance optimisation, according to Gartner.

The analyst firm advises companies to look closely at alternative technologies including Wan optimisation and application acceleration.

"They can relieve the need for expensive bandwidth increases in many cases, and actually make a better improvement on how the application runs than by just throwing bandwidth at the problem," said Keene.

"Look at IP Wans and move away from leased lines. It appears to be a 'no-brainer', but so many companies are still keeping with their private circuits."

Companies could save substantial amounts of money if they stopped slavishly following vendor-recommended architectures, Gartner advises.

"Vendors do not want to give you the lowest cost solution around. They want to sell all the bells and whistles they have in their drawer," said Keene.

"Many network designers do not go it alone and take the risk. They say: 'If I go along with this vendor I am pretty sure it is going to work and my job is safe.' But money is wasted."

Instead of spending money on ill-conceived and ill-judged technology acquisitions, firms must design their networks and infrastructures around business-critical applications in the business process, Keene advised.

"The network is a slave to the business and not the other way around as happens in many cases," he explained.

"They cannot rely on traditional design techniques because, in most cases, this is not the most efficient cost-effective way of producing an increase in the productivity of the business."

Keene added that companies should not invest without identifying a significant productivity gain from the purchase that should be measurable.

Firms should also have a shorter outlook. "People invest in something and look at getting a return on it over a five-year or seven-year period. But they should not. They should just focus," he said.

"Keep to one year, maximum three. Just buy what you need for the short term because the needs of the business are probably going to change so much after three years that what you identified is not going to be any use anyway.

"And they should not fix what is not broken. But people do, and they should not. They should leave it alone. If it is working, leave it."

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