Thursday, August 05, 2010

Virtualization Software Cost Overruns at 44% of Large Enterprises

CIO insight published a recent planning guide for IT spending in 2011, and although they didn’t highlight in the summary, the study revealed from some startling findings about dramatic overspending in virtualization software.

The study, CIO Insight's 2010 IT Investment Patterns study, was a survey fielded in May 2010 and received a total of 695 responses, 295 of which are from large enterprises with more than 500 employees.

It should come as no surprise to datacenter managers that virtualization is expected to be the hottest enterprise IT investment area in 2011, with 42% indicating that it’s the highest area of growth since 2009, and with 46% indicating that virtualization and consolidation were top priorities in 2010 into 2011.

However, although virtualization software is a hot investment area, the survey indicated that large organizations were experiencing dramatic cost overruns / exceeding expected budgets.

Examining the top 10 largest enterprise cost overruns, virtualization software was clearly the loser in this category, with 4.6% over spending compared to budget, nearly double the next highest overspending area.

As well, the percentage of companies reporting that virtualization software missed budget targets, was 44% of the large enterprises surveyed, higher than those indicating issues in server, ERP and BPM / BPI application projects.

Only 11% indicated that they spent less than budget targets, dramatically less than all other budget categories.

So why the overbudget issues? Was it:

a) Because virtualization proved to be so valuable that the companies went over-budget / over-spent on purpose?

b) Because the promised consolidations fell short, driving up overall costs?

c) The software for virtualization, VMware being the most popular, proved to be more expensive than originally estimated?

In digging through the full report it is not clear from the research what the overspending driver was. Interested to see if other picked up on this issue and whether the research illuminates the potential cause?

A summary of the results is provided at: http://www.cioinsight.com/c/a/Research/2011-IT-Budget-Building-14-Areas-To-Watch-137685/


The full report can be found at: http://www.cioinsight.com/c/a/Research/IT-Investment-Trends-Vary-With-Company-Size-139738/

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