Badly-implemented IT governance may result in companies spending more when trying to save money, according to a group of experts in Germany.

Taking part in the Forrester IT Forum in Berlin, Euan Davis, a leading analyst, told Computing that a company's own processes must first be analysed before outsourcing as the bulk of money wasted tends to be lost through such errors.

He explained that if such internal workings are poorly constructed, there is a major risk that a company may stumble and fall should other services go to data centres or offshore.

Mr Davis concluded: "If businesses can't specify what they want or craft service level agreements effectively, they will lose the savings they were intending to achieve in the first place."

Earlier this month, Forrester revealed that software vendors are becoming more accommodating on prices with customers since the recession has pulled the drawstrings tighter on company purses.

In a recent survey of SMEs for Connect, the two most important benefits of outsourcing were guaranteed response times and allowing in-house IT staff to concentrate on more strategic issues.