Report: Companies waste 1/3 or more of their IT budget

C-level executives are aggressively looking for new ways to save money heading into 2023. Increasingly, they are turning to IT asset managers to uncover savings.

Cutting back on unnecessary IT spending is essential. A Flexera report found that on average, IT asset managers estimate that 1/3 or more of their IT budget is currently wasted. This includes desktop software (38% of spend wasted), data center software (34%), SaaS (33%) and IaaS/PaaS (33%).

As global economies teeter on the edge of recession, the importance and influence of ITAM teams are increasing. This year, the Flexera State of ITAM Report found 43% of IT asset manager (ITAM) teams report directly to the CIO/CTO, nearly twice as many as last year, when that figure was just 22%.

ITAM, SAM savings impacting IT budgets

High-performing ITAM teams continue to focus on cost savings and modernization. Top-shelf ITAM managers know how to save money. Software asset management (SAM) programs realized savings most successfully through the reuse of (non-cloud) licenses to avoid buying new ones (83%); better negotiation of vendor contracts (83%); and reduction of maintenance spending on unused software (81%). The survey also found that savings from SAM programs increased as programs matured.

ITAM managers know how to avoid audits. This is still an important skill. Fifty-two percent of respondents reported an audit by Microsoft in the past three years, followed by IBM (34% percent) and Oracle (31%). An unfortunate 14% of companies said they paid more than $5 million in software vendor audit fees in the past three years — up from just 9% the year before.

Underscoring the importance of software asset management, more than half of SAM respondents (53%) reported having implemented “advanced” SAM practices, which the report defined as going beyond responding to audits and tracking SaaS and cloud usage, to include ongoing tracking and optimization of software licenses. Fewer organizations are as far along in hardware asset management (HAM), with only 36% reporting practicing “advanced” HAM, defined in the report as including tracking of end of life/end of service in addition to inventory, deployment and firmware.

Survey methodology

The Flexera State of ITAM Report explores the thinking of 500 global professionals who manage and participate in ITAM, SAM and HAM processes in medium and large organizations of at least 1,000 employees. The survey was conducted in the summer of 2022.

Read the full report from Flexera.