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Gartner: Eight trends that could send IT asset costs soaring

This article was originally published on Technology.Info.
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IT leaders need to get ready for the “disruptive forces” that have the potential to lay waste to their best-laid budget forecasts and IT spending plans.

When Gartner polled IT leaders about their priorities for 2013 at the end of last year, “reducing the cost of IT” was one of respondents’ top three business priorities, along with “increasing enterprise growth” and “delivering operational results”.

New research from the IT market research company, however, suggests that achieving all three will be a tricky juggling act for technology bosses at a time when eight “disruptive forces” threaten to push IT asset costs sky-high.

According to Gartner’s Alexa Bona, what hard-pressed CIOs face is nothing less than a “volcano of IT asset costs, with striations of intense pressure coming from both supply and demand” - presumably, the supply-side pressures imposed by IT vendors and the demand-side pressures imposed by end-users in the organisation.

“Throughout 2013 and beyond, IT asset managers and IT procurement executives will need to manage these pressures proactively in order to optimise costs and avoid a potentially damaging ‘eruption’ of IT asset costs,” she writes.

So what are the eight disruptive forces that could spell disaster for IT costs and IT budgets? According to Bona, they are:

1. Internet of Things: From speed cameras to heart monitors, more and more machines and devices are now ‘smart’. In other words, they can report on their own status, swap data with other machines and devices and receive instructions remotely. There are huge advantages to this vast network of physical objects able to sense, communicate and interact, says Bona, with a vast array of “new experiences, operating efficiencies and business models” just waiting to be created. “However,” she adds, “as more and more of these very numerous devices become connected to traditional software, licensing models with device-based fees or indirect fees will result in licensing cost explosion.”

2. Maintenance fees: It’s no secret that the annual maintenance fees that software vendors charge customers provide them with a regular and predictable source of easy money, generating profit margins of 85 percent of more, according to Gartner estimates. “These fees are rising steadily and are more difficult for ITAM and IT procurement managers to reduce, even when the software is not in use,” writes Bona. Is it time your organisation put its foot down? Bona thinks so, urging IT professionals to improve their supplier management skills, avoid purchasing licenses they don’t need and negotiating price protection for maintenance payments.

3. Software audits: These are growing more frequent and more intense; are being demanded by both Tier 2 and Tier 1 vendors; and are harder to defend against, says Bona. Is your organisation audit-ready?

4. Cloud computing: Can you compare traditional services with industrialised and cloud services and explain the comparative benefits and risks? These are the skills that Gartner believes IT pros need to manage risk and negotiate beneficial terms in today’s immature cloud market.

5. Mobile and app stores: Which device, which platform, which operating system? The days when all your employees carried the same device - approved, purchased and managed by the company - are over. You’ll need a firm grasp of compliance-tracking, the related costs of employee-owned devices and the various consumer apps being brought into your company - and enterprise apps stores, says Gartner, may help you optimised mobile asset costs and management.

6. Virtualisation: “IT procurement managers are still finding it difficult to reduce software costs in virtualised environments and IT asset managers are struggling to manage compliance with complex and changing virtualisation contract clauses,” says Gartner’s Bona. That’s particularly true for desktop virtualisation, she adds.

7. Big Data: It stands to reason: you collect and analyse more data, you need larger databases and more storage capacity. Core-based licensing metrics will only complicate matters, as will information services charges based on metrics such as data integrity and quality.

8. BYOD: Last but not least, mobile devices - whether they’re owned by the company or the individual employee - are adding new security and environmental risks and costs to the IT asset disposition equation.