Chargeback: Transforming IT Costs to Profits

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Are you spending too much on IT? This question has vexed IT managers over the past few decades, and is still being asked today. Cost-cutting initiatives have gained prominence during the recent economic downturn, and demands to reduce costs have persisted.

IT systems and infrastructures are often perceived as costly investments, and their business value can be difficult to prove. As a result, CIOs often get a budget inadequate for effectively getting the most value out of each IT asset, and for supporting employees’ productive use of these assets. One issue compounding the problem is that new software license purchases and upgrades are often based on estimated headcounts, causing the organization to overspend.

Cost transparency through IT chargeback is rectifying this problem. IT chargeback offers flexibility to allow the company to keep up with current technology, and to adjust contracts with service providers that match the organization’s real usage of their IT services.

In a recent (ITAK) Information Technology Asset Knowledge Magazine, October 2011 issue, Signe Marie Stenseth, Open iT Senior VP, wrote, “Leaders of business units appreciate transparency as well as fair and reliable chargeback mechanisms, as both contribute to better valuation of IT services. In addition to meeting regulatory financial reporting requirements, chargeback creates greater awareness of which assets are in use and what they cost, resulting in conscious planning and fiscal stewardship. In the long run, reducing waste delivers significant cost savings, especially in a larger and more complex environment. In conclusion, leading the way to reshape and reorganize a company is never easy, but there are solutions available to help in the process. By analyzing usage data, business leaders can make prudent decisions about using financial resources[i].”

Business leaders want to improve the quality of products and services, and at the same time meet the competing demands of reducing operating costs. To be able to accomplish both of these objectives, they need critical metrics to be able to forecast future costs more accurately. With IT cost optimization tools on the market today, managers now have many options on implementing changes to turn IT costs into profits.

What steps are you taking to reduce IT costs? Is this initiative on your plate for 2012? Optimize and monitor your IT Assets with Open iT license management and reporting tools. Learn more about how to transform IT costs to profits, schedule a free live demo today.

[i] Stenseth, Signe Marie. “Business Value From Metering Software Usage.” Information Technology Asset Knowledge October 2011: 105-108.

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