This white paper outlines the strategic and operational advantages of IT cost transparency, a "game-changing" approach that is enabling companies like 1-800-FLOWERS.COM to reduce costs and become more effective in their decision making.
I N D U S T R Y W H I T E P A P E R
The Strategic
and Operational
Advantages
of IT Cost
Transparency
www.comsci.comThis white paper will help you
answer these key questions:
» How can our organization lower
its IT costs?
» How can we ensure the best value
for our IT expenditures?
» How can our organization make
better decisions about how to use
technology?
» How can we react more quickly
and effectively to opportunities
in the market?
»
INDUSTRY WHITEPAPER: THE STRATEGIC AND OPERATIONAL ADVANTAGES OF IT COST TRANSPARENCY PAGE 2www.comsci.com
nformation technology has evolved to become a critical factor in today'sbusiness. Information is a critical resource that ensures that products arebuilt and shipped on time, sales are closed, customers satisfied, costsIcontrolled, revenues grown, profit margins maintained, and earnings per sharegoals achieved. By some measures, companies spend around 3.5 percentof their net revenues on IT, and, depending on company size and industry,1that number can go as high as 9.5 percent.
Any expense of this magnitude needs careful management to ensure thatspending is under control and that it is aligned with the strategic objectives ofthe organization. By avoiding waste, companies can reduce costs and ensuremaximum efficiency and productivity. By using IT strategically, companies cangain a competitive advantage in the marketplace, delivering something faster,better, or cheaper than their competitors.
While companies have been using IT to support their corporate governanceand financial management for several decades, the idea that governance andfinancial management techniques should be applied to the use of IT is arelatively new one. Just as companies are now striving for financial transparencyin dealing with investors and regulators, they are also looking for costtransparency in the use and management of IT, where every expense is clearlystated and understood within the context of the overall business strategy.
The benefits of IT cost transparency range from improvements inoperational margin to improved organizational flexibility, including:» Reduced costs and improved efficiency» Better decision making and better strategic alignment» Continuous improvement» Enhanced financial governance
Establishing true cost transparency has the potential to become "transforma-tional," a way to effect organizational change, as it allows business units and ITorganizations a "language" to set priorities, to drive the business forward usingtechnology, to modify behavior and to make better business decisions.
Yet, tying IT expenditures to corporate strategy is easily said and difficult toexecute. Many companies lack the tools, technology, and corporate culture thatmake it possible to capture the true cost of IT, associate the costs with changesin business results, and then take proactive and corrective action on the results.
1. The Executive's Guide to Information Technologyhttp://books.google.com/books?id=azChzcZQZfIC&pg=PA47&lpg=PA47&dq=it+spending+as+a+percentage+of+revenue&source=web&ots=gYluSsnZEu&sig=gmB86JatjF5u2jSR_q_kMDWHweU&hl=en&sa=X&oi=book_result&resnum=8&ct=result#PPA56,M1
INDUSTRY WHITEPAPER: THE STRATEGIC AND OPERATIONAL ADVANTAGES OF IT COST TRANSPARENCY PAGE 3www.comsci.com
Cost Transparency DefinedTransparency implies a sense of total visibility, that nothing is hidden ordifficult to discover, that you can see through the surface to understandthe inner structure.
IT cost transparency provides Business Unit Managers and IT with "visibility"into the true cost of consuming a company's monthly IT services, enabling theWithout cost business to be run more efficiently. Every summary number can be "drilledtransparency into" to get to the underlying detail numbers. Likewise, every number isin technology refreshed monthly, so that managers can understand whether the number isspending, growing, shrinking, unexpected, exceptional, or, in a word, actionable.companies are: At a practical level, IT cost transparency means that managers at all levels» unable to benchmark of an organization should be able to discover:costs and trends against » what IT resources and services they consume each month,industry data » why they are being charged the IT expense for the consumed resources, and» unable to report tech... [download for more]
