Public service over-spending on technology by at least £2.4 million

Insight research reveals inability to optimise costs means public sector organisations are wasting millions on software

Posted 10 December 2020 by

Unused software licences are costing the public sector an average of £2.4 million (€2.64 million) a year – enough to pay the wages of 50 skilled IT specialists.

Research by Insight suggests 94 percent of European public service organisations are under pressure to reduce costs during the ongoing pandemic, yet an inability to optimise IT spending is significantly hampering efforts.

The inability to optimise IT costs means organisations must find savings elsewhere. Since March 2020, 52 percent of organisations have downsized their workforce, and almost a quarter (23 percent) have downsized the IT team specifically. 46 percent are sweating IT assets for longer, and 36 percent are consolidating physical office facilities. In the same period, investment in areas such as software, IT support and infrastructure has increased.

Yet most IT teams said these investments weren’t as strategic as they should be, leaving room for optimisation. 48 percent of IT teams say they need to optimise their IT support investment; 51 percent software; 61 percent private cloud; and 69 percent Infrastructure as a Service.

The research also found that 66 percent of firms have a large amount of duplicate hardware and software because they needed new technology at the beginning of lockdown. Sixty-eight percent cannot scale their software licences to the number of employees they have, and 70 percent are struggling to manage an increase in BYOD since March 2020.

“Systemic challenges around cost management have been an issue for organisations for many years,” said Emma de Sousa, Senior Vice President EMEA at Insight. “In the current environment, public sector organisations need to make cost savings. But equally they need to avoid decisions that could impact their capacity to execute digital transformation plans and deliver essential services. Focusing on cost optimisation could uncover opportunities to save money without harming the organisation’s ability to operate effectively.”

Other findings included:

Lack of visibility

Unexpected purchases by departments outside IT add £1.2m/€1.31m a year to cloud services costs, while 60 percent think they are over-spending on licensing but cannot confirm their belief and begin to correct the issue. Greater visibility of this spending could uncover more opportunities to optimise.

Organisations lack the skills and knowledge to optimise

Seventy-five percent cannot negotiate effectively with software vendors, and 72 percent do not have the skills or knowledge to optimise their approach to asset lifecycle management.

Opportunities exist for consolidation

Sixty-nine percent or organisations have not consolidated their IT infrastructure since March 2020. Seventy-four percent are using multiple applications that have the same functionality, but are used by different teams in different situations; while 61 percent have multiple contracts for the same software because it was bought by different departments at different times.

Organisations preparing for an increase in audits

Eighty-seven percent expect that software vendors will increase their licensing audits in the wake of COVID-19 to ensure they are being paid correctly.

“The challenges of 2020 will continue into 2021, and IT departments will have a key role in helping organisations face them,” said de Sousa. “Eradicating waste and driving more efficient operations will put organisations in a better place to ensure they are resilient enough to continue delivering services, whatever the future brings. Cost optimisation isn’t easy, and often requires specialist skills and knowledge, but investing in optimisation now will provide immediate financial returns.”