Organizations could save $6.8 billion through improved ASM

BANGALORE, INDIA: Research released today by HCL Technologies Ltd (HCL), has highlighted how global 2000 organizations could realize savings of $6.8 billion through improved Application Support and Maintenance.

The survey of 300 UK and US CIOs at large enterprises with 1,000+ employees was commissioned by HCL Technologies and conducted by independent research company Vanson Bourne.

The survey revealed that ASM now accounts for 38 percent of large organizations' overall IT budget each year.  Based on the IT expenditure of Fortune 2000 companies this equates to $11.3 million per organization annually.

Furthermore, 83 percent of respondents stated that the cost of maintaining and supporting these applications was increasing year on year, while over the last 12 months organizations have on average seen a 29 percent increase in support tickets for ASM.

 

Against this backdrop it is unsurprising that IT departments are also finding it increasingly difficult to prioritize application problems and/or service requests. Indeed 88 percent of the large enterprises surveyed admitted they found prioritization 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 organizations stated they have mapped business benefit from IT.

 

"ASM represents a disproportionately large proportion of IT spend. Many organizations are struggling to meet users' heightened expectations of application performance, which in turn is leading to a growing number of support tickets," said Vijay B. Iyer, senior VP, Global head of Applications Outsourcing, HCL Technologies.

Running the business vs changing the business

 

The survey highlights how organizations are currently dividing their IT spend between ‘keeping the lights on' and delivering business transformation:

 

·         On average, more than two-thirds (68 percent) of annual IT budgets are spent on running the business (RTB)

·         87 percent believed that budgetary pressures were hindering their ability to undertake business transformation projects

·         83 percent stated it was priority for them to reduce the proportion of their organization's IT budget on RTB, so they can invest more in transforming the business through innovative technology projects

·         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.

 

Lack of incentive to change existing ASM processes

 

45 percent of organisations stated ASM was managed in-house, whilst 17 percent outsourced this function.  The remaining 38 percent stated that ASM was carried out by both an in-house team and an outsourcer.  Irrespective of how ASM was undertaken, the survey highlighted that one of the biggest barrier towards reducing ASM costs is a reluctance to disrupt the current status quo:

 

·         Of those organizations who outsourced part or all of their ASM function, 78 percent believed that their outsourcer could be more innovative in delivering ASM, but were reluctant to do so because it may right result in reduced work and revenue

·         72 percent believed that their outsourcer tries to keep the level of support tickets high to ensure the fees paid to them cannot be reduced

·         Of those organizations that undertake ASM in house, 92 percent believed their team could be more innovative in transforming the model of ASM.

 

ASM remains too reactive and siloed, leading to inefficiencies

 

The survey illustrated that in the vast majority of organizations ASM is reactive and focused on firefighting, as opposed to delivering real business value.  Furthermore, for most organizations ASM continues to be aligned to particular applications as opposed to the business, which is symptomatic of IT working to IT-led rather than business-led KPIs:

 

·         The majority of CIOs (83 percent) believed that traditional ASM processes are inefficient as they deal with and resolve application incidents on a case-by-case basis, rather than using an industrialized and consistent solution

·         67 percent stated that their ASM function was inflexible in supporting business expansion and is not providing continuous improvement

·         81 percent of companies organized their ASM function around application silos

·         81 percent stated that a small number of applications created a disproportionally high number of ASM tickets

·         91 percent said root-cause analysis was taking longer due to the increasingly complex nature of the IT landscape.

 

"The traditional IT-KPI focused approach towards ASM is fast becoming outdated. CIOs need to be able to drive costs out of their operations, while at the same time drive business performance.  This can be enabled by using business-focused KPIs, yet our survey reveals that less than half of organizations use such metrics.  It is clear an alternative approach is required for an IT function that hasn't evolved for the last decade," added Iyer.