Firms losing billions on failed telecoms projects

Hudson & Yorke report says CIOs need to think more about strategy, sourcing and governance

Dan Worth, V3.co.uk 22 Jan 2010

Businesses are failing properly to source and manage network and telecoms projects, costing them more than £12bn in unnecessary costs, according to a new report from specialist consultancy Hudson & Yorke.

The study, carried out by analyst firm Forrester, surveyed 81 multinational companies from 12 countries with an annual telecoms spend of over £6m.

The results suggest that chief information officers (CIOs) are not committing enough staff resources to telecom strategies, sourcing or governance, despite spending around 20 per cent of their budgets on telecom services.

Many companies are therefore losing money on contracts they sign with telecoms providers by not probably negotiating deals or understanding the specific needs of their networks, the report explained.

As a result, one fifth of those surveyed said that they often failed to meet the objectives set out in the original business case for investment.

Mike Newlove, chief operating officer at Hudson & Yorke, argued that the research underlines a failure by CIOs to realise the importance of the telecoms infrastructure to the business.

"With almost one fifth of budgets being spent on telecoms it is vital that those in charge of IT departments realise how central telecoms are to the underpinning of their entire communication network," he said.

Newlove also believes that companies are failing to assign dedicated staff to their telecoms infrastructures, creating further difficulties by tackling problems on an ad hoc basis.

"Without specialist telecoms staff firms are unable to properly negotiate contracts as no-one is aware of the cost savings and efficiencies that could be made, and simply resign contracts," he added.

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