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Top firms admit application support is failing their operations

Antony Savvas | March 21, 2014
Fortune 2000 organisations could save $6.8 billion (£4.1 billion) through improved application support and maintenance, according to research.

Fortune 2000 organisations could save $6.8 billion (£4.1 billion) through improved application support and maintenance, according to research.

Outsourcer HCL Technologies commissioned research among 300 CIOs at leading UK and US companies, and found that ASM costs were continuing to rise in the face of shrinking IT budgets.

ASM is now said to account for 38 percent of large organisations' overall IT budgets each year.

Based on the IT expenditure of Fortune 2000 companies this equates to $11.3 million per organisation annually.

The research found that 83 percent of companies' costs of maintaining and supporting applications was increasing year on year, while over the last 12 months organisations have, on average, seen a 29 per cent increase in support costs for ASM.

Against this backdrop, said HCL, it is unsurprising that IT departments are also finding it increasingly difficult to prioritise application problems and/or service requests, with 88 percent of enterprises admitting they found prioritisation a "challenge".

At the same time, with IT underpinning a number of business functions, 90 percent of respondents said that resource and skills restraints were making it difficult to align business and IT objectives.

Only a small percentage (14 percent) of organisations said they have been able to map business benefit from IT.

"ASM represents a disproportionately large proportion of IT spend. Many organisations are struggling to meet users' heightened expectations of application performance, which in turn is leading to a growing number of support tickets," said Vijay Iyer, global head of applications outsourcing at HCL Technologies.

"With the need to drive greater efficiencies and business value from IT, organisations can no longer allow their current ASM functions to stagnate. By taking a more proactive and efficient approach they can free up capital that could be allocated towards more innovative transformational projects," he said.

The research found 83 percent of CIOs saw a priority in reducing the proportion of their organisation's IT budget being spent on RTB (running the business), so they can invest more in transforming the business through innovative technology projects

But 86 percent indicated they didn't expect their existing ASM function (in-house, outsourced or combined) to deliver any cost savings in the next three years.

It was found that 45 percent of organisations managed their ASM in-house, whilst 17 percent outsourced it. The rest said ASM was carried out by both an in-house team and an outsourcer.

 

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