IT Department Costs - Large Businesses
Large businesses have several areas to consider when evaluating software purchases for employees. This includes budget, company priorities, replacement of outdated systems, security needs, deployment options, and software and vendor reputation.
INFORMATION TECHNOLOGY (IT) BUDGETS
- In a 2016/2017 survey, it was found that there was an increase of 3% in IT operational spend in 2017. 32% of large companies across sectors such as manufacturing, government/non-profit, and professional/technical services, spent over $20 million on IT budgets between January – May 2017. IT departments expected to spend at least 10% more on software both in 2017 and 2018 while the total tech spends growth was expected to be 5%.
- In the U.S. software market, the budget includes — but not limited to — software ($11 billion), applications ($172 billion), middleware ($68 billion), operating system ($11 billion), enterprise process applications ($89 billion), and application development ($6 billion).
- About one-third of large businesses with 500 – 999 employees saw an increase in their IT budget since 2019, and this was as a result of corporate tax cuts. 56% of large companies with over 5,000 employees expect an increase in IT budget and 43% expect it to remain the same.
- In order of the highest priority to the lowest, IT departments are spending on security/privacy, cloud applications, cloud infrastructure, BI/data warehousing, mobile devices, and DR/business continuity.
- Companies with over 5,000 employees prioritize productivity solutions while companies with 1,000 – 4,999 employees prioritize virtualization.
- Since 2019, the budget for software purchases has been broken down as 12% for operating systems, and 10% for virtualization, productivity, and security software, respectively.
- Getting software that is trusted by other large companies, have a track record for reliability and now or very little issues with errors in coding is also a priority.
- Choosing software that is of a high standard, including having the SSAE 16 or SOC 1 and 2 accredited audits, and industry-standard firewalls, are priorities for large companies.
REPLACEMENT OF OUTDATED SYSTEMS
- IBM has provided a matrix that can be used to evaluate software and vendors simultaneously, to have the most reliable updates needed. The matrix looks at categories such as Dynamic planning blended with analytic (eg. personalized workspace/custom views), Align strategy & operational plans (eg. Modular architecture with cross-functional planning applications), Model business drivers/planning applications (eg. Driver-based calculations), and Manage content (eg. Role-based security), and others.
- To acquire the best software options, large companies choose vendors which are evaluated based on the quality of references, annual revenue, number of employees, customers and industry references, and others.
- Due to the difficulty faced with rectifying issues with software that are mainly old-school like (eg. Common Business-Oriented Language), companies are seeking software with more modern languages like Java, C, and Python.
- Companies like Amazon and Microsoft have taken the step to replace or upgrade outdated systems using cloud services but merged companies with their respective legacy systems are more reluctant.
- Large companies are currently looking at cloud infrastructure to reduce expenses and increase flexibility and have started to increase their budgets for this.
- There was a recent 2% IT budget increase in cloud spend for large companies that have 1,000 – 4,999 employees but a 3% increase for those with over 5,000 employees.
- Software with the ability to have multi-cloud security is being considered in more recent times. Companies opt for software that is not too old school and would require a skill set from a dwindling population of experts to fix. Cloud is a popular deployment option for large companies.
- Companies with more than 5,000 employees have an increased budget because they are concerned with the level of security in the companies and need to replace outdated technology. Due to the recent government shutdown in the U.S., many companies are now concerned about the security of their IT departments which are believed to be at risk, including the government's.
- Large companies have since been updating their security software, introducing artificial intelligence while still adhering to the GDPR standards.
- These companies have to also consider their employees' skills when upgrading their software because of the gap in the industry.
- Multi-cloud security is now being considered as an option to increase security in the IT departments especially since several cyber attacks have taken place in large companies.
- Knowing information such as the vendor's approach, results, the budget they've worked with, ROIs received, and who they've worked with directly can provide the necessary details about their reputation within the industry. Reading reviews with an eye for details such as deception, inability to meet deadlines, poor customer service, and high employee turnover rate for vendors could be insightful for companies wishing to purchase the software.
- Positive reviews such as surpassing customers expectations, ethical practices, enthusiasm, responsiveness, and happy employees should also be considered.
- Ensure vendors have expertise delivering software to large companies, check industry experts, and peruse the vendor's client list. A comparative evaluation spreadsheet is recommended in determining if the vendor or the software's reputation is good enough for companies to use (eg. IBM).
- IBM focuses on areas such as the number of employees, customers and industry references, industry analyst ratings, implementation, and support, as well as methodology, options for training, hours of support, and communities for users to select the best vendor.
- An interview with each vendor is also appropriate in making the decision process easier and objective and prepares companies for the negotiation phase.
- Data encryption must be available to companies to prevent breaches in the security of sensitive information.