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Do you know how much your IT costs?

Ann Bednarz | Jan. 26, 2011
Tight budgets and competition from cloud providers are forcing IT to focus on finances.

"We've had to invest a lot in security capabilities in order to be able to convince companies like Deutsche Bank, Capital One and IBM to put their general ledger expense information into a solution like this. But they're doing it," Dancziger says.

Superseding spreadsheets

For many companies, financial management software is a replacement for scores of spreadsheets. The software does the heavy lifting - collecting structured and unstructured data from all over the enterprise, cleaning it, and normalizing it so it can be analyzed. Standard reports make it easy to view broad metrics such as IT spend as a percentage of company revenue, as well as more technically detailed reports such as a cost comparison of Windows, Linux and Unix servers, broken down by the hour.

Having that kind of data enables IT teams to more clearly articulate how tech investments translate to business value.

"It's about more than just understanding costs and reporting those costs," notes Jeff Day, director of marketing at Apptio. "It's about budgeting, forecasting and cost optimization. It's about helping IT finance groups and the CIO run the business of IT."

Armed with better data and a clear business rationale, IT is better positioned to get the green light on proposed projects. "A CIO can talk the language of the business and say, 'here's how much this technology is going to cost to do, here's how much it's going to cost to maintain year after year, and here's the business value that it's going to bring, in terms of productivity, increased revenue or customer loyalty,'" Day says. "When a CIO can talk in those terms, it shifts the role of IT from just a cost center to a strategic partner to the business."

IT financial management software also can help IT users identify areas where they can reduce costs -- servers that are good candidates for consolidation or virtualization; applications that might be ready for retirement; opportunities for tiered storage; and support contracts that might not be worth continuing.

"This is not just about cost accounting. This is about looking at the cost vs. the value and helping the business to say, 'this is not a good way to spend our money,'" Gomolski says.

IT often gets nowhere when it suggests shutting down a legacy application without providing numbers to back up the suggestion. By making it clear how much you're spending and the amount of resources an application is consuming, IT can turn the tables and put the question to the business person, Gomolski says.

"'You tell me: Are you getting enough value to justify that?' A lot of times they'll say 'turn it off.'"

 

 

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