In most organizations the cost of Information Technology has been on the rise for many years. Especially in some service industries eg. Financial Services the strategic importance of IT is undeniable. But also in other businesses have IT cost become a substantial part of the cost base. Many managers still lack transparency of these IT cost. For that reason there is a need to understand IT cost and thereby manage these cost.
Our philosophy is to first understand the positioning of IT within the organization. The more strategic it is the more crucial it is to get a grip on IT cost and to understand the IT products and services. The trend towards a more cloud based IT landscape has it’s pros and cons. One of the pros is the simplicity of the service offering. You know exactly what it cost. One of the cons on the other side is that services are in general a bundle (application, database, software, hardware, support, etc.) and you easily lose track if the price is the right price. Especially when there are not too many alternatives. Even more tricky are the situations where an organization does some IT services in-house and other ones are outsourced.
A good IT cost model should have at least three key ingredients.
- The IT cost base by cost type and department
- A list of all IT services provided (sounds easy but it’s not)
- The departments that consume the IT cost
In our approach we approach IT cost model in a similar way as manufacturing cost models. Do you have questions? Contact us.