As you may all know, on June 23, 2016 a referendum was held in the United Kingdom (UK) to decide whether it should remain in the European Union (EU). The final decision for the referendum ended with the UK exiting the EU. The UK is ranked 4th in the world’s global spending on IT. If the UK decided not to use their resources on IT spending, it wouldn’t necessarily cause a global recession as they only contribute 5.3% to the world’s IT spend however, it would still cause some disruption. The United States IT Spending accounts for 32.4% of the global spending on IT. If the US were in a predicament that forced them to spend less on or even cut out IT spending altogether, it would cause greater concerns on a global level. Regardless of the Consequently, the British Pound is at a 30 Year low against the US Dollar. Confidence in the UK’s economy has been severely shaken. This has created a lot of uncertainty in terms of what it means for future trade relations between the world and the UK. Many of the treaties that were made between the UK and the EU post World War II have become obsolete and now new negotiations must be made. Due to all the uncertainty, the UK will have to be even thriftier with how they spend their money.
The IT Spend Disrupters
Organizations will be looking to do business in stable economies and will begin to look outward. Brexit will most definitely disrupt regular business for IT in Europe, but what about the rest of the world? What other disruptions is the world facing?
In 2016, Gartner noticed that 1/3 of the organizations they are tracking have increased their cost optimization. This is significant because cost optimization has increased 400% more than usual. The usual percentages of organizations that practice cost optimization is at about 7% or 8%. Gartner observed that organizations are no longer simply cutting costs so that they can reinvest their money to staying in business, but are actually using those cost savings to fund new projects. 50% of IT spending for these new projects is being spent between IT and Business Units (BU). More organizations today are becoming digital businesses. Gartner forecasts that 75% of organizations will become digital businesses by 2020. Using traditional IT to do business is becoming an unfeasible option as it is more expensive. Organization’s IT budgets are not increasing but IT is expected to deliver even more of deliverables. Thus IT departments are forced to increase their cost savings to remain competitive.
There has been a significant growth in cloud software. The continual annual growth rate for cloud software is 17.9% meanwhile the continual annual growth rate for non-cloud software is 2.9%. Currently, there are more organizations that use non-cloud software, however the growth rate at which organizations are using cloud software is growing significantly which indicates that more organizations are becoming digital businesses.
The digital alternative will ripple across SaaS implementation, license and maintenance. 33% of all organizations are in cost optimization mode, 50% of IT spend will be shared between business and IT in 2017 and 75% of businesses will be digital businesses by 2020. Gartner predicts that businesses will save $100 Billion dollars through digital alternatives.
IT spending is a must for organizations but the economy isn’t doing so well. This phenomenon has been going on for years and as a way of adapting to this challenge organizations have committed to finding ways of increasing cost savings. Technology expense management (TEM) is instrumental in creating cost savings for organizations. Cimpl provides their customers with a practical means of tracking spending and IT assets. What is so good about this? Knowing exactly how, and what an organization’s IT department is spending their resources on. It provides the organization with insight of which services bring the most benefits and which services don’t bring the desired amount of benefits. Those services that aren’t bringing the amount of desired benefits must be investigated to verify if the service is worth further investment. Based on that premise decision makers can make informed decisions and increase their cost savings. Telecom expense management helps organizations take control of their expenses.
Having telecom expense management will give organizations a means to free up resources. Organizations won’t have to get their team to take the time to go through invoices and verify if the company was overcharged or not. In those cases automated reports can be easily accessible to show where the organization was overcharged. Without having a telecom expense management, employees would have to manually go through all the invoices, risk the chance of making error in their reports, and spend time doing a task that won’t generate any new revenue for the organization. To learn more about how Cimpl can help manage your expenses, click here.
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