NPI Advises Enterprises on Five Ways to Self-fund New Social, Mobile, Analytics and Cloud IT Initiatives

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Higher maintenance costs to challenge funding for SMAC innovations in 2013.

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It's costing companies more and more to keep their current IT infrastructure up and running. That’s leaving less room to invest in the new IT initiatives that will set companies apart from their competition and get them closer to the customer.

NPI, a leading spend management consulting firm, warns that the cost to support and maintain existing IT systems is eroding companies’ ability to fund new investments in social, mobile, analytics and cloud IT initiatives (SMAC). Out of the $3.8 trillion expected in worldwide IT spending in 2013 (Source: Gartner), NPI estimates there will be $760 billion in unnecessary overspending in non-value creation areas like maintenance and support, over-subscription, license program misalignment, and sub-optimal contract negotiation and management. This cost waste is already consuming enterprise IT budget dollars that could otherwise fund revenue-building IT initiatives.

“There is a misconception that enterprise IT spending directly correlates with enterprise innovation. The truth is that it’s costing companies more and more to keep their current IT infrastructure up and running. That’s leaving less room to invest in the new IT initiatives that will set companies apart from their competition and get them closer to the customer,” said Jon Winsett, CEO of NPI.

NPI advises that companies optimize their current IT vendor contracts as an effective way to self-fund new SMAC projects:

Self-audit and optimize software licensing agreements. IT vendors continue to introduce new licensing models and programs at a rapid pace, while enterprises struggle to understand the impact of these changes on their existing agreements. Companies should fully understand all licensing options and conduct mid-term health checks to ensure contractual compliance.

Consider third-party support alternatives. NPI strongly advises companies to explore third-party hardware and software support providers, or hybrid alternatives that combine third-party and vendor support. NPI’s experience shows that third-party support providers can reduce support costs by 30 to 50 percent, while providing competitive quality of service.

Align wireless carrier plans with actual usage. Most enterprises already have low visibility into wireless usage thanks to the proliferation of personal and corporate mobile devices across the business, and an ever-growing number of carrier plans available to them. As a result, companies continue to pay for plans and devices that are underutilized and misaligned with their actual wireless usage patterns.

Benchmark pricing for both direct and reseller channels. Many IT buyers assume it’s less expensive to buy from a reseller than directly from the vendor, while other IT buyers assume the opposite. NPI recommends companies level the playing field by benchmarking pricing from vendors and multiple resellers. NPI also recommends companies expand their reseller benchmarking analysis to encompass discounts, contractual terms and conditions, and channel incentives.

Bid it out. NPI advises companies to keep pressure on their incumbent IT vendors. To ensure pricing, discounts and terms remain competitive, and to stay abreast of more affordable options, companies should bid out different facets of their IT portfolio.

For more information on NPI’s IT 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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