From Chaos to Clarity: Mapping the Hidden Costs of Decentralized IT

Have you ever considered having a map of your IT operations? Picture yourself in the shoes of an IT manager, navigating a sprawling metropolis without a map. As you move, it’s challenging to recognize the roads and landmarks since they are unfamiliar. The route to your destination remains unclear. This will not only cost you a significant amount of time and gas but may also lead to a few wrong turns. 

This happens with IT managers like you who are struggling with decentralized IT operations, which are often characterized by inconsistent data silos, disjointed platforms, and a sense of blind spending. 

In this environment of operational chaos, the value can be compromised, a lot of resources can be wasted, and the potential for costly surprises can be around the corner. 

On the other hand, a central map—a unified IT Asset Management (ITAM) solution—provides a cloud single source of truth for all IT-related information. This map highlights the hidden pathways of your IT infrastructure, revealing all the interconnected hardware, software, and cloud services. It also provides information on the financial implications associated with each. 

With a centralized map, you can transform the chaotic sprawl into an organized IT landscape, empowering your IT leaders to make informed decisions, optimize budget spending, and reduce risks effectively. 

According to Deloitte’s survey, ITAM ranks among the top five organizational initiatives, emphasizing its strategic role in effectively managing IT resources.

However, the journey to clarity often begins with understanding the tangible implications of decentralized IT – the tangible costs that accumulate when IT, Finance, and Procurement teams operate in silos, having their own fragmented views of the IT landscape. 

The tangled web: When IT, Finance, and Procurement are not on the same page

When your IT folks, finance team members, and the ones purchasing the tech (procurement) are not on the same page (and are not seeing the same IT landscape), many costly problems can occur, which are mentioned below: 

• Delayed onboarding: Imagine some new employee join your organization who are ready to hit the ground running. But their laptops are not prepared, their access to relevant software is not updated, and everyone’s pointing fingers about who’s responsible. This usually happens when your IT team lacks communication with the HR team and has no idea who’s joining the team. They don’t even know when the purchasing team ordered the wrong thing. It not only makes your organization look disorganized but also wastes valuable time for the new employees. Studies show that only 12% of employees agreed strongly that their organization does a great job onboarding new people. 
• Unaccounted assets: It becomes difficult to keep track of your IT equipment without a unified system. Your finance and procurement teams may have a record of the purchase, but your IT teams would lack visibility on the new devices. Without a good tracking system, they wouldn’t know where the devices are and who is using them. These assets are termed “ghost assets” as they may end up in a closet, unused. 
• Compliance gaps: Regulatory institutions and internal audit teams demand accurate records of software licenses, hardware configurations, and data security protocols. When different teams are purchasing and managing their own IT bits and pieces without any centralized system, it becomes easy to accidentally break the rules, leading to hefty fines and audit failures. Research shows that the average cost of a data breach in 2024 was $4.88 million globally, highlighting the financial risk associated with poor visibility of assets and potential security vulnerabilities. 

The map of hidden costs: Where your money disappears 

The map of hidden costs entails the dark corners of the IT operations in your organization where all your money and efficiency disappear. Let’s explore some key areas on this map: 

The Black Hole of Ghost Assets

“We bought the equipment…somewhere…maybe?”

How frustrating can it be for you as an IT manager to know that your organization has bought IT equipment, but it’s vanished from the radar? Maybe they’re kept in a drawer, someone took one of them home and left the company, or they’re just lost in the system. These “ghost assets” can become a bigger problem for you, bringing a ton of considerable risks. 

Why is it a pain? 

• Security risk: IT equipment, such as laptops and tablets that cannot be tracked, can become prime targets for theft or loss. You cannot keep a device safe unless you don’t know that it exists. You might not even know it has been stolen or lost until it is too late. This happens when you have zero visibility on assets. 
• Audit alert: When it is the audit season, the auditors would want all proof of what you own and where it is. Missing equipment raises audit flags, begins time-consuming investigations, and can ultimately lead to hefty penalties for non-compliance. As per a report by Protiviti, IT governance and regulatory compliance remain a top concern for CIOs. 
• Budget waste: Data silos in IT operations can drain your budget. When there is no clear visibility of existing IT equipment, IT teams can often end up purchasing new equipment unnecessarily. There is no use in buying a new laptop if you already have one in good condition in the storage room. Without a centralized view, you can end up wasting money on equipment that you already own. 
• IT support headaches: Your helpdesk and IT support teams waste valuable time and effort trying to help people with devices they can’t even find in their systems. This impacts their productivity and the overall efficiency of the IT department. Several studies show that IT support teams spend an average of 19 percent of their time looking up information. 

Real-world pain point: Suppose your CIO has requested you to present a comprehensive inventory report of all company laptops. After conducting a frantic search through your spreadsheets and asking around others in the company, you come to realize that 20 percent of them are missing from the official records. No one in the company has information on where they are or who has them. It is not because of a single individual’s mistake but rather a systemic lack of a unified view across your IT, finance, and procurement teams. 

License Renewals No One Tracked

“The bill gets paid for the software, but it sits unused.”

Software licenses constitute a significant portion of the total IT expenditure. However, companies working in a decentralized environment fail to keep up with tracking of license deployments and actual usage. 

The finance team processes renewal invoices, whereas the procurement team makes sure the contracts are in place. But the IT team may not have a clear understanding of which licenses are actively being used and which are simply not being used at all. Your company keeps paying for it, but nobody is getting any value from it. 

Why is it a pain? 

• Overspending: Most companies go ahead with auto-renewal for software licenses, a convenient practice that can become a significant source of wasted money. Licenses for software that is not used by employees who have left the company of for features that are never accessed continue to be renewed automatically every day, eventually draining the IT budget unnecessarily. Industry analysts estimate that up to 30 percent of enterprise software spending is wasted on unused or underutilized licenses. 
• Compliance risk: It is important to know how many licenses your company is actually using to stay legal with the software companies. Using more licenses than you paid for can lead to costly audits and hefty fines. A report by KPMG indicates that unplanned software audit costs can range from 5% to 25% of the original license value.
• No bargaining power: When it comes to renewing your software licenses, if you do not know how many licenses you really need, you won’t be able to negotiate a better deal.
• Shadow IT growth: When different teams operate in silos and lack visibility into existing software assets, they may independently buy their own software solutions, leading to a proliferation of “shadow IT” – applications that are not centrally managed, potentially creating security vulnerabilities and further fragmenting the IT landscape. Gartner found that shadow IT is between 30% and 40% of IT spending in enterprise organizations. 

Real-world pain point: Imagine you get an approval from your finance team for a $50,000 bill to renew a software license. Six months later, your IT team discovers that only 12 out of the 100 licenses you paid for are actually being used. Had this usage data been available to you at the time of renewal, your organization could have saved a whopping $44,000. 

Purchasing Tech Without a Clue

“Buying tech without the right specs—or the right strategy.”

In a decentralized environment, the procurement team might just pay attention to purchasing the tech (IT equipment) at a lower price. The problem would arise when you purchase a cheap computer but it doesn’t fit the needs of your computer engineers. They would probably need a more advanced computer with the right specs for their jobs. That budget software may not be compatible with your other systems. 

Why is it a pain? 

• Mismatched purchases: Purchasing the cheapest available software or hardware without understanding the specific performance, security, or compatibility requirements of the IT department can lead to slow, unreliable tech that doesn’t help your employees do their jobs effectively. 
• Vendor overload: Without a centralized procurement plan, different business units can end up independently sourcing similar products or services from multiple vendors. If everyone’s busy buying their own tech, you can simply end up dealing with a million different vendors for support and repairs. 
• Wasted time: Without a clear plan between procurement and IT teams, the purchasing process of new tech can take a long time as both teams would need to go back and forth, trying to understand what is actually needed. This slows down the process and can impact project timelines. 
• Sustainability blind spots: If you are not tracking how long you are using your IT equipment, you might be getting rid of equipment that is in perfect condition or holding old, energy-guzzling equipment for too long. 

Real-world pain point: Imagine when your deployment team urgently needs a powerful new server to roll out a critical big project. Your procurement team saves a few thousand dollars by getting a cheaper, less powerful server. You can only imagine what to expect when you try to launch the new project. Massive slowdowns, crashes, and an extremely frustrated team. 

Budgets Built on Incomplete Data

“Planning IT strategy with one eye closed.”

When it comes to financial planning for IT, you need to rely on accurate and detailed data regarding existing assets, upcoming renewals, hardware refresh cycles, and depreciation timelines. In a decentralized environment where this information is often scattered across different departments and systems, the finance team often does not have a clear and accurate picture of the true cost of IT operations. For them, the IT budget is just a guess. 

Why is it a pain?

• Budget shortfalls: If your finance team lacks visibility into upcoming software license renewals, impending hardware refresh needs, or the depreciation timelines of existing assets, the resulting budget plans will fall short of covering the real-world financial needs of the IT department. This can lead to budget crises and the need for unplanned funding requests. 
• Overfunding or underfunding: It is very likely to spend too much on things that are not important and not enough on the things that really matter when you do not have a clear understanding of the actual IT needs and priorities. Projects that are low-priority may receive excessive funding, whereas critical projects may remain underfunded. 
• Surprise costs: When equipment breaks unexpectedly or software licenses expire without warning, you have to spend extra cash for quick repairs and fixes. 
• Losing trust with the leadership: If your IT budget plans are always wrong, the leadership will start to lose faith in your ability to manage IT costs. 

Real-world pain point: Imagine putting together an IT budget for the whole year based on the limited data available from different spreadsheets. Six months into the year, you witness a series of unexpected software license renewals that you forgot needed renewing and a critical hardware failure. Suddenly, you are out of your budget and have to explain everything to the leadership team. 

Hidden cost zone: A summary of the value drain

Why are you, the IT manager, the hero here 

In this landscape of decentralized chaos and hidden costs, you, the IT manager, can be in the perfect position to fix this mess. You can map the fragmented landscape and bring much-needed clarity to the IT operations of your organization. You can understand how all the tech pieces fit together and how they don’t. You can understand the needs of your users. It’s only you who can bind the tech stuff and the business goals together. 

This doesn’t require you to point fingers at your finance or procurement teams. You just need to recognize that everyone’s working with incomplete information. Only you can have the opportunity to create a clear map that everyone can use. By implementing a unified ITAM strategy, you can transform the perception of IT from a cost center to a strategic enabler of business success. 

Your next steps towards visibility 

The global ITAM software market is projected to grow from $2.63 billion in 2023 to $4.11 billion by 2030, reflecting the increasing importance of asset management in IT strategies. 

Once you recognize the need for a single source of truth for all IT-related information – a comprehensive and unified ITAM system – you can begin your journey from chaos to clarity. This centralized map will help you provide a holistic view of all hardware, software, cloud services, contracts, and their associated financial implications. All in all, this centralized map will show you everything you own, where it is, who’s using it, and how much it costs. 

As an IT manager, you need to look back at the “map of hidden costs” we just discussed above. Which of those dark corners do you think look familiar in your organization? What piece of information do you think is missing? When you are able to get this information, you can assess the extent to which these issues are impacting your organization. 

Ready to shed some light on those hidden costs? Try our interactive IT Cost Calculator