IT Cost Management

Also within IT, a professional cost management claims to actively influence and manage cost levels and cost structures.

Also IT services require following cost-related functions:

Evaluation of efficiency and / or profitability

Support of decisions concerning capacity, methods, investments, etc.

Cost and price calculations of IT service products and for billing purposes


Only if the reasons for costs that have occured are transparent and understandable to management, costs may be analysed, judged, controlled, argued, and finally reduced.

Particular issues of interest are cost structure (management of fixed costs) and imputability of costs (management of shared costs).

A professional IT cost management aims at

transparency of costs (and their causes)

flexibility of costs

a sustainable reduction of costs.

Transparency of costs means imputability with regard to influencing cost drivers

the resource causing costs
type of costs
burden centre of costs
unit of cost
responsible decision maker
recipient of service (person, department, business unit)
accounting period
and others more.

Flexibility of costs (I) means in how far costs vary with output volumes. High percentages of costs varying with output volumes, i.e. mainly variable costs, means flexible cost structures.

Flexibility (II) means capability to reduce costs over the time. How fast and at which conditions and costs can IT assets be divested and IT service contracts be cancelled in order to reduce costs.

Reduction of costs should be seen in relation to required quality and quantities of IT services and IT infrastructure resources. Not cost cutting at any price, but a sustainable increase of efficiency should be the objective of cost management measures.

In this regard, the IIW Institute has developed a practice oriented Management Programme for these companies that are interested in gaining a leading position in IT cost management. After a check-up of IT services and IT infrastructure required, it is evaluated how IT services and infrastructures are provided the most intelligent way. After analysing cost and cost structures different measure regarding cost reduction and cost optimisation in short, medium, and long terms are suggested. We have a particular eye on cost structures (management of fixed costs) and imputability of costs (management of shared costs). Besides conceptual consulting, we also offer support when implementing (e.g. projects management).