IT users across the UK are scrambling to cut technology costs – and storing up big problems for the future, says a Birmingham hi-tech expert.
Nearly three quarters (73 per cent) of large corporations and Government departments are cutting their IT costs, with a further ten per cent intending to carry out IT cost reduction initiatives in the future.
And according to a new report – How low should you go? – published by business advisory firm Deloitte, 84 per cent of programmes designed to reduce IT costs in large corporations and Government departments are reactive, with IT leadership rarely involved in setting cost reduction targets.
Many organisations are willing to take significant risks to achieve savings, impacting business operations by delaying projects.
Chris Robertson, technology, media and telecommunications partner at Deloitte in Birmingham, said: “IT departments are scrambling to cut costs but are unwittingly storing up problems for the future.
“Cost reduction targets are being dictated by individuals with limited understanding of the costs, risks and issues associated with IT service delivery.
“IT is reacting to business pressure by delivering short-term tactical savings that lack ambition, rather than driving long-term benefit.
“With around two-thirds of respondents showing a willingness to cancel projects and rely on out of date infrastructure, the ability of IT to support the business is in danger of being compromised.
IT departments and businesses face the risk of declining service levels.
“Operational risk may not be the only consequence; there will also be pent-up demand for new investment that will need to be made when business conditions improve, creating a different set of challenges for those organisations that have cut back on their IT staff.
“IT skills are scarce and organisations that have not retained the expertise they need may have a real challenge attracting new staff when markets strengthen, particularly if they have a ‘hire and fire’ reputation.” Reducing third party spend, outsourcing and headcount reduction – both contract and permanent staff – are the principal means by which organisations are reducing IT costs.
According to the Deloitte report, 72 per cent of respondents are asking suppliers to reduce their prices.