Organisations implement technology to improve and enhance their business, but they often fail to manage the infrastructure they have created. Unmanaged, this infrastructure can negatively impact on the company`s business and profitability. This is particularly the case with rogue spending, which impacts on both the infrastructure and the business. Inana Nkanza, MD of iLAYO Software Solutions, discusses the issue of rogue spending, the damage it can do, and how infrastructure management can solve the problem.
Rogue spending or rogue purchasing (also sometimes called "spending black holes") refers to the procurement of products or services within an organisation by unauthorised people, from unofficial suppliers.
Usually, it results from a lack of clearly defined and transparent procedures and policies regarding the acquisition of IT assets. A lack of understanding about the reasons for having procurement policies in place is also to blame for the phenomenon of rogue spending.
A survey of 225 organisations in Europe, conducted by The Centre for Management Development at the London Business School, revealed that rogue spending was characterised by lack of corporate visibility and control. Over 50% of surveyed companies admitted that they have minimal control over who buys what in their organisation.
Unnecessary assets
One of the many goals of infrastructure management is to ensure that the organisation is not spending money on assets that are not needed. When the infrastructure is poorly managed, an organisation is often unaware of the assets it has, what is being used or not used, and what assets could be better deployed elsewhere.
Rogue spending is a symptom of this problem. People buying equipment outside of the established procedures (assuming there are any procedures in place) are making these acquisitions blind. They are not aware of the assets already in the company that may serve their purpose. By making their rogue purchases, they are introducing unnecessary expenses and assets into the company.
This is not to say that only companies with unmanaged infrastructures suffer the scourge of rogue spending. It is something that is practised across both unmanaged and managed infrastructure. However, the problem is more visible in managed infrastructures and can thus be more readily addressed.
Support
For the IT helpdesk to provide required levels of support to users, it needs detailed knowledge of what is being used, where it is, who is using it, how it links to the network, and the impact it has on the network. Higher levels of support can be achieved within a well managed infrastructure.
If someone in the organisation buys an asset without following the approved channels, the helpdesk is confronted with an unknown, which reduces its ability to provide the organisation with the desired or promised support.
A rogue purchase can introduce an element that is not compatible with the organisation`s infrastructure; does not comply with the technology standards being applied; the helpdesk may not have the expertise needed to manage or support the incorrectly acquired asset; or it could interfere with network performance.
Purchasing disadvantage
Effective, strategic buying strategies are essential in bringing real benefits to the organisation. They allow an organisation to negotiate preferred pricing from selected vendors based on volume or contractual terms such as warranties and bundled support.
Rogue buyers might not be aware of these agreements and could buy from a supplier offering lower prices but inferior terms, or higher prices and inferior terms, undermining the company`s negotiated advantage.
One way of curtailing rogue spending is to make buying policies transparent and trans-organisational. The purpose and function of the IT department needs to be clearly communicated across the company.
Using integrated asset management solutions, an organisation can realise both hard rand savings related to negotiated contracts, and soft rand savings related to the purchase order process; and the IT department can channel the organisation`s spending into avenues that return savings and sound investments.
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iLAYO Software Solutions focuses on the delivery of best-of-breed infrastructure management solutions. Through partnerships with industry leaders, it provides solutions that assist IT organisations in managing the availability, cost, location and the level of service that each IT asset provides, thus helping IT organisations to manage IT according to their business prerogatives, rather than just for the sake of uptime. Its technology solutions, along with its professional services capability, enables it to assist its clients in adding real, measurable quality to business processes and business objectives. iLAYO is synonymous with service excellence and has provided solutions to many leading organisations.
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