Daily Archives: November 18, 2011

The Basics of Information Technology Cost Management

It’s a simple five-step process:

  1. Get a handle on the TCO of IT to the business
    How many units have IT support staff? How much are you paying in maintenance and software licenses each year? How much are you paying in hardware leases and upgrades? What about consultants and outsourced support? The data center(s)? Hosting? And don’t forget the “device propagation” that results every time a new application is added to the data center or a CXO gets a new toy (like an iPad).
  2. Focus on the Cost Drivers
    Energy? Hardware? Software? Projects? Where’s the money going, and why? Treat the IT organization like it is a business and balance the supply and demand.
  3. Be relentless in Valuing IT services
    Examine the cost structure through the eyes of your customers and segregate functions and services into value-add and commodity categories and drive the associated costs accordingly.
  4. Be creative in meeting demand and sourcing work
    Examine the people, process, and technology infrastructure carefully to determine if there is a more cost effective way to deliver the necessary services.
  5. Bring in an expert to re-source the hardware, software, and support you need
    Don’t negotiate multi-million dollar deals on your own if you’re not an expert in IT systems and the current state of the market. If you try, chances are that you’ll overpay by a lot more than 10%!