Every year, companies lose at least 10 to 20 percent of their IT budgets through avoidable expenditures.
If we take a fictitious budget of 500 million US dollars, this means an annual write-off of at least 50 million US dollars. At the same time, around a quarter of companies admit that the proportion of wasted budget is even higher. Above all, technical debt and redundant applications are seen as cost drivers. The majority are planning to introduce methods to optimize the IT landscape. However, 40 percent have not yet implemented any of the common methods – and especially rarely those for application rationalization. According to the latest LeanIX IT Cost Optimization Survey, companies have the power to create new scope for the future in their IT.
Technical debt and redundancies are the main culprit
IT experts agree on which problem areas are most responsible for unnecessary IT spending. More than half say that costs associated with outdated technology and technical debt are a drain on the budget. That’s not surprising. The last few years have seen a massive expansion of IT portfolios, further fueled by the need to make quick decisions during the pandemic. Those who neglected to shut down legacy systems and clean up the landscape under the pressure of investment and time are now facing major challenges.
Redundant applications are ranked second in terms of contributing to budget waste. By contrast, the impact of unplanned cloud spending or excessive costs from overpaying for SaaS licenses is rated much lower. It may be that the respondents are not really aware of these costs – bearing in mind, for example, that the market research and consulting company IDC states that up to 50 percent of recurring expenditure can be reduced with solutions for SaaS optimization.
Companies can use IT optimization measures to increase their profitability, achieve greater efficiency, mitigate technological risks and, last but not least, free up budget for investments in innovation and growth. Those who systematically and continuously improve their portfolio also strengthen collaboration within the company. The LeanIX IT Cost Optimization Survey 2023 also makes it clear that the more common methods are used to optimize IT landscapes, the more positively the collaboration between IT and business is perceived in the companies surveyed.