Reader Question: Is it really all that important to know the cost of the services IT provides?

Third Sky Expert Answer:

Pamela Erskine, Director of Consulting, Third Sky

Many leaders in IT are continuing to focus on the cost of the network, application, server, etc. without creating the linkage necessary to understand the total cost of the services they are providing to the business. While the cost of these IT components is relevant and the cost should be monitored, the component itself does not provide value to the business. For example, the business doesn’t want a network. They want the ability to use the internet, print, and access storage. All of which require applications, security, and other components to enable the business to complete these functions. To understand the full cost of a service, we must consider labor, applications, infrastructure, networks, facilities, continuity, maintenance, etc.

With disparate technologies in the environment, IT costs rising, resource/organizational challenges, and vendors providing more services via the cloud, effectively partnering with the business to meet their objectives becomes an urgent need as they demand transparency of both the cost of IT and the value it brings to the business.

With increasing pressure for transparency of the IT spend and further, to reduce costs where possible, IT leadership often ends up in a situation where they are defending staffing levels and technology purchases. By identifying services and the associated cost, leaders are in a better position to understand and explain the cost vs. value equation.

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To learn more about this topic, download the white paper:  Service-Based IT Cost Modeling and Identifying Cost Savings Opportunities