Questions That Result in Actionable Cost Analyses

Questions That Result in Actionable Cost Analyses

Capturing What You NeedCapturing What You Need

How much of what you capture is what you intend to measure? Are you getting 100% of IT costs per the general ledger? Does it include cost drivers for an application, such as software licenses and development projects? If not, you could understate your cost and that can lead to misguided decisions within IT and over-consumption by the business in general.

Level of Detail and Drill DownLevel of Detail and Drill Down

Can you drill down from the total cost of an application to arrive at total server costs? Can you then see unique costs for each server? This matters because some stakeholders want proof of what is driving costs and specifics about where to focus further investigation.

Slicing and Dicing What You MeasureSlicing and Dicing What You Measure

Can you project spend regarding growth versus transforming the business? Can you project server costs by size, platform and location? Dimensionality can increase understanding, context and specifics for action.

Interplay of IT CostsInterplay of IT Costs

To help manage different functional areas’ impact on each other in the applications and services to deliver, ask: Which vendors are driving costs to what projects? And which applications drive costs to which business units?

Costs in ContextCosts in Context

Are you showing costs in contexts that matter to your stakeholders? Can you show development and run costs to application owners?

Reconciling Back to Systems of RecordReconciling Back to Systems of Record

Can you demonstrate how your cost analysis reconciles back to systems of record? It’s important to show that your cost analysis ties to the total for IT cost centers in the general ledger. Which general ledger transactions are included in hosting costs for each app?

Factors Your Stakeholder Can ControlFactors Your Stakeholder Can Control

Are you modeling costs so that what you show a stakeholder includes factors within their control? Other questions to ask: If the business unit changes consumption, will its allocated costs change? If an application owner correctly estimates storage and server capacity, will they reduce the reported total cost of ownership?

Help Stakeholders Understand Cost DriversHelp Stakeholders Understand Cost Drivers

Can you show stakeholders how you arrived at your costs? What weightings did you use to distribute data center power costs to servers? What data did you use to derive those costs?

Up-to-Date DataUp-to-Date Data

Timely data is crucial. How old is the IT asset data you are using? Is your analysis updated each month? This matters because static data points lose their impact over time and you might make decisions based on data that describes the previous situation.

Frequency and Consistency of MeasuresFrequency and Consistency of Measures

Are you consistently measuring the same costs? How often? Frequently what matters more than the absolute cost of something is a trend, so think movie versus snapshot. Trends can reveal the cost impact of goals you set for decisions you make. Also, being consistent in what you measure can help distinguish actual cost changes from changes in corporate accounting.

Correlating Cost Data With Other MetricsCorrelating Cost Data With Other Metrics

Most decisions are not made on the basis of cost alone. Can your cost data be correlated with other metrics, such as the cost of allocated but unused storage? What about the cost of virtual servers with less than 5% peak CPU utilization over the past three months?

Karen A. Frenkel
Karen A. Frenkel
Karen A. Frenkel is a contributor to CIO Insight. She covers cybersecurity topics such as digital transformation, vulnerabilities, phishing, malware, and information governance.

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