Managing budgets can be a tricky task for most of us. Consider your personal situation: do you usually break down all your expenses and compare them with your budget from last year? Most of us do not manage our personal budget very well, so how can we improve doing this in the company that we work for, or being more specific: how can we manage IT costs in a company?
Whether you are in charge of a small team or not, IT has been considered the heart of most companies. Software and systems must be constantly updated and ready for diverse situations, while most executives do not have enough time to model and track the cost to deliver and sustain the IT Services they provide to the business.
What is Cost Transparency in IT, and Why Does it Matter?
Being transparent with costs can help to use money in a better way. Like in our personal life, if you can do this in your job you will be able to refocus on things you want to accomplish. That is the reason why companies are tracking costs and expenses and making them highly transparent to ensure business growth and measure ROI (return on investment) using the IT budget.
For an IT department, creating cost transparency is a way to optimise costs and guarantee to meet strategic initiatives while keeping the budget on track.
The information generated through Cost Transparency in IT gives leaders and stakeholders the possibility to create business value and make accurate decisions for future innovations. By being more confident in communicating reasons behind costs with numbers and data, executives can clarify expenses and make decisions based on facts.
How to use Cost Transparency in IT
The process of using Cost Transparency in a business involves three main elements:
1. IT Asset Baseline
As the first step in all budget planning, the IT Asset Baseline analyses all expenses in the IT department and everything related to business services consumed by the company: networks, storage, applications, hardware, and so on; similar when we consider all bills to start managing a personal budget.
2. Business System Correlation
Imagine grouping all your expenses in the order they occur to identify the value of each expense in your personal life. That is the main proposal of the second step: organise the numbers in order of action in an understandable way for decision-makers.
3. Business Intelligence
An important part of cost transparency involves breaking down components of the budget and understanding why and how they have been used to.
Business intelligence allows executives to know how much they are spending on servers, licensing, virtualisation and who is using them in the company, likewise when you realise you do not need three different streaming services in your house because nobody is using the one dedicated to sports.
The value of cost transparency in IT
The pandemic has brought unstable scenarios for most businesses and IT has shown its importance through its capacity to deliver information and efficiency in real- time.
IT departments should not be viewed as a cost centres anymore but be recognised as revenue producers. By understanding the correlation among systems and replacing assumptions for real data, organisations can add real value to their business and make strategic decisions with evidence, a real advantage for uncertain times.
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