Organizations of all sizes, in virtually every industry and every region around the world, are investing heavily in technology to drive growth and increase competitiveness. In this first annual Flexera 2020 State of Tech Spend Survey, we found that, overall, respondents are spending 8.2 percent of revenue on IT.  Where is the money going? The top three initiatives cited by survey participants are digital transformation, cybersecurity and cloud first/cloud migration. These large-scale projects require substantial technology investments, so it’s not surprising that more than half of respondents say they expect to increase IT spend over the next year.  

As companies make these large tech investments, however, are they getting maximum return? It’s likely that many are not. Survey respondents estimate that 12 percent of their technology spend is wasted. But research by Flexera and other industry experts puts the amount of waste at 30 percent or higher.  For a company with a $250 million IT budget, that can be as much as $75 million down the drain. Consequently, there’s a strong case for putting more emphasis on identifying and eliminating waste. A decrease of even five or 10 percent would free up a lot of money for critical initiatives that create value for the organization.  Survey respondents say increasing spend efficiency and cutting waste are challenging because it’s so difficult to gain visibility into costs and manage IT spend effectively. The biggest obstacle to visibility—cited by 61 percent of respondents—is reporting on spend by IT business service delivered.  Respondents also say the large number of manual processes represents a significant challenge to effective spend management.  Considering the magnitude of potential savings, tackling these challenges can have a major impact on the bottom line.