NPI Warns Enterprises of Information Security Overspending Risks in 2014

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Research shows companies will overpay $10.1 billion for IT security solutions in 2013, and even more expected for 2014.

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Those businesses that continue to have a transactional view of security sourcing, and handle vendor negotiations and management as they always have, will be targets for overspending.

NPI, a leading spend management consulting firm, advises enterprises to prepare for greater overspending risk on their information security projects in 2014. The firm’s recent research cites seven purchasing, contracting and vendor management mistakes that can result in spending more than necessary for information security products and services.

The need to protect every layer of the IT infrastructure, from mainframe to mobile, has generated an increase in security costs as well as purchasing, contracting and vendor management challenges. This has been exacerbated by the continual emergence of new players, merger and acquisition activity, and the commoditization of “traditional” security solutions (e.g. firewalls).

For 2013, NPI estimates that companies will overpay $10.1 billion for IT security products and services. The firm expects the propensity for IT security overspending to significantly increase in 2014.

NPI advises companies to eliminate overspending in the year ahead by avoiding several common purchasing, contracting and vendor management mistakes:

  •     Not taking a holistic view of IT supplier management. Many enterprises fail to leverage demand and security vendor relationships across the business. This forfeiture of leverage equates to higher costs.
  •     Entering myopic vendor agreements. New technology, fear of commitment and auto-pilot approaches to contract renewals have prompted many companies to enter short-term agreements (i.e. one-year term) that take valuable discounts off the table.
  •     Failure to benchmark VAR pricing and value-add. Buyers rarely benchmark VAR pricing and terms to see which VARs get/give the best discounts and which offer best professional services and support.
  •     Over/under-investing in support. The degree of support required for different facets of the IT security varies. Companies continue to overbuy support for less-critical aspects, like multi-factor authentication and proxy cache, while under-investing in others.
  •     Lack of competitive pressure on incumbents. Certain vendors are entrenched in the enterprise and have little incentive to offer competitive pricing, discounts and terms during renewals.
  •     Navigating new areas of IT security, like mobile device management, unguided. Most enterprises are inexperienced with policy development, platform and vendor selection, and contract negotiations within this vendor category.
  •     Buying the bundle. As vendors acquire and expand new security offerings, bundled IT security solutions have become common. As a result, companies often pay for more than they need.

“The pace of change across the IT security landscape has accelerated. Those businesses that continue to have a transactional view of security sourcing, and handle vendor negotiations and management as they always have, will be targets for overspending,” said Jeff Muscarella, EVP of NPI.

For more information on NPI’s IT and telecom spend management services, visit http://www.npifinancial.com.

About NPI
NPI is a spend management consulting firm that protects companies from overspending in specific cost categories – information technology, telecommunication and transportation. Using a combination of market experts, proprietary methodologies and extensive data, NPI ensures that prices and terms are best-in-class. Reviewing more than 14,000 purchases annually, NPI provides objective oversight for billions of dollars of strategic spend for its clients. To learn more about how NPI can help your company start saving today, visit http://www.npifinancial.com or call 404-591-7500.

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Hannah Bower
Bower Communications
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