The last decade has brought many changes for IT in the enterprise and how it is managed. IT cost management is one facet that has evolved greatly as more stakeholders realized the importance and value of IT as a driving force of the business. Many CFOs, CEOs and other business leaders now help share the responsibility of the IT cost management function with the CIO and work together to improve it.
The CFO's role is especially crucial to the IT cost management function if an organization wants to cut wasteful spending in favor of valuable IT programs. Be ready to answer these six questions about your IT costs situation if your CFO has started to accept his new expanded role and responsibilities in this area:
1. What are our support options?
Paying too much for support and maintenance is all too common these days. Now is the time to evaluate your current agreements to make sure that you are not over or under supported. If you are not already using a third-party support provider, it is a good idea to consider your options - you may save as much as 50 percent over vendor prices.
2. Do we have to stay with the same vendors?
While sticking with a familiar vendor has its advantages, it is always a good idea to compare the prices and services of other vendors. A good working relationship is important, but not at the expense of your budget. Talking to the competition will also give you some extra leverage and possible discounts at your next negotiation.
3. Can we benchmark our IT costs?
Standardized pricing for every IT product and service just doesn't exist. This allows for drastic changes to occur in prices and terms fairly often. Always compare your vendor's prices against the competition to ensure they are charging fair market value. Contract terms should also be clear and understandable to avoid paying hidden fees.
4. Who should manage IT purchasing?
Many businesses are now realizing the need for both Vendor Management Offices (VMOs) and IT Controller positions to help optimize IT purchasing. These new roles are becoming more and more necessary because most IT managers don't possess the sourcing experience necessary and IT purchases are too complex for most purchasing departments. Ideal candidates have the required IT sourcing and purchasing knowledge to get the job done.
5. Do we have any fixed-fee engagements?
Avoid fixed-fee engagements at all costs. More than likely, you will be changed for additional fees and overages - especially when dealing with new IT projects that require a little extra time to learn. Opt for engagements that charge for service on a time and materials basis instead, so that you only pay for what you use.
6. Will IT purchases support the organization's objectives?
Before any new IT investments are made, take care to ensure that they are in line with the goals and strategies of all other departments. You can do this by giving IT mangers access to the needs and goals of each department. Once aligned, financial risk is minimized and IT purchases can be made that are beneficial to the whole organization.
The CFO's role is especially crucial to the IT cost management function if an organization wants to cut wasteful spending in favor of valuable IT programs. Be ready to answer these six questions about your IT costs situation if your CFO has started to accept his new expanded role and responsibilities in this area:
1. What are our support options?
Paying too much for support and maintenance is all too common these days. Now is the time to evaluate your current agreements to make sure that you are not over or under supported. If you are not already using a third-party support provider, it is a good idea to consider your options - you may save as much as 50 percent over vendor prices.
2. Do we have to stay with the same vendors?
While sticking with a familiar vendor has its advantages, it is always a good idea to compare the prices and services of other vendors. A good working relationship is important, but not at the expense of your budget. Talking to the competition will also give you some extra leverage and possible discounts at your next negotiation.
3. Can we benchmark our IT costs?
Standardized pricing for every IT product and service just doesn't exist. This allows for drastic changes to occur in prices and terms fairly often. Always compare your vendor's prices against the competition to ensure they are charging fair market value. Contract terms should also be clear and understandable to avoid paying hidden fees.
4. Who should manage IT purchasing?
Many businesses are now realizing the need for both Vendor Management Offices (VMOs) and IT Controller positions to help optimize IT purchasing. These new roles are becoming more and more necessary because most IT managers don't possess the sourcing experience necessary and IT purchases are too complex for most purchasing departments. Ideal candidates have the required IT sourcing and purchasing knowledge to get the job done.
5. Do we have any fixed-fee engagements?
Avoid fixed-fee engagements at all costs. More than likely, you will be changed for additional fees and overages - especially when dealing with new IT projects that require a little extra time to learn. Opt for engagements that charge for service on a time and materials basis instead, so that you only pay for what you use.
6. Will IT purchases support the organization's objectives?
Before any new IT investments are made, take care to ensure that they are in line with the goals and strategies of all other departments. You can do this by giving IT mangers access to the needs and goals of each department. Once aligned, financial risk is minimized and IT purchases can be made that are beneficial to the whole organization.
About the Author:
Joseph B. Kappernick specializes in helping Fortune 500 companies save money. He recommends that you visit NPI to learn more about IT cost management consulting
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