Fundamentals of Technology Cost Management

Global information technology (IT) spending on assets, including PCs, tablets, mobile phones, printers, data center systems, enterprise software and communications services, grew from $3.5 trillion in 2012 to $4.24 trillion in 2021. Global IT spending is expected to increase by about 5.1 percent to US$4.45 trillion in 2022, according to forecasts by large-scale research companies.

IT budgets are one of the most critical items in the total budget of businesses. Businesses periodically make IT investments as part of their digital transformation journey to improve their existing services, provide a better user experience and stand out from their competitors. Of course, no business has an unlimited IT budget. For this reason, CIOs and IT managers are responsible for managing their technology budgets in the most effective way.

What is Technology Cost Management?

Technology cost management (IT Cost Management) is a periodic process performed to evaluate and measure the IT investments that businesses have made. Basically, each technology asset is an expense for the company. Some of these expenses are one-time expenses and some are ongoing expenses. A CIO or an IT manager needs to know where the IT budget for which they are responsible is being used. Technology cost management makes IT expenditures of businesses more visible, allowing all IT expenses to be tracked and evaluated clearly.

Why is Technology Cost Management Important?

We mentioned in paragraph 2 of this article that no business has an unlimited IT budget. For this reason, we can say that the purpose of every business is the same.

“Minimum Cost & Maximum Efficiency”

Otherwise, companies will not be able to get the efficiency they want as a result of their IT investments and they will fail A holistic evaluation process is required to measure the success of a business's digital transformation. Technology cost management covers the costs including software, hardware, integration, system, consultancy, etc. in a business.

How can Businesses Reduce Their Technology Costs?

IT teams have employees tasked with optimizing the IT environment, ensuring IT security, reducing IT expenses and managing IT assets. Because an IT infrastructure is the heart of operational processes in businesses. Businesses aim to make new IT investments by reducing their current IT expenditures because their IT budgets are limited in some periods. This is where the concepts of technology cost management and technology cost optimization emerge.

The most effective method for businesses to reduce technology costs is to adopt a holistic management approach. In general, we can summarize these methods as follows.

• IT Asset Management covers the management of all IT assets in a business.
• Application Portfolio Management covers the management of all applications in a business.
• Software Asset Management covers the management of all software and software licensing processes in a business.
• SaaS Management covers the management of SaaS subscriptions in a business.
• Hardware Asset Management covers the management of a business's SaaS subscriptions.
• IT Cost Management covers the monitoring, management and evaluation of all IT costs in a business.