From Cost Transparency to Cost Optimisation: Driving ITFM Maturity
Moving Beyond ITFM Transparency to Actionable Insights
Cost transparency is a foundational ITFM goal, but visibility alone is not enough. To mature their ITFM practice, organisations must shift toward insights that drive action. This includes:
Identifying True IT Cost Drivers for Better ITFM Decisions
Identify inefficiencies and hidden waste in IT spend. Knowing what drives cost allows leaders to manage it.
Unit Economics & Benchmarking for IT Cost Optimisation
Measure costs per user, per service, or per business function. Use internal and external benchmarks to identify performance gaps.
Scenario Planning & IT Spend Forecasting for Strategic Investments
Model future spending patterns, test what-if scenarios, and steer investments based on business priorities.
Cost Conversations That DELIVER TANGIBLE ITFM Results
Tailoring ITFM Cost Messaging to Key Stakeholders
Once ITFM foundations are in place, cost optimisation efforts can begin in earnest. But as I’ve often emphasised, success hinges on targeted conversations—with the right people, at the right level, focusing only on the factors they can influence.
It’s not about giving everyone access to every cost component. It’s about presenting relevant, actionable insights that facilitate trade-offs and drive down cost. For example, a business application owner doesn’t need to understand the cost breakdown of the IT storage team—they need to understand the cost implications of storing 10 years of transaction data in premium storage vs an archival alternative.
Business Leaders vs Technology LeaderS – BRIDGING THE IT COST GAP
Aligning IT Costs with Business Value and Strategic Objectives
At the strategic level, conversations between business leaders and technology leadership focus on:
- “Why does technology cost so much?”
- “Why is application A more expensive, and how can we reduce it?”
These conversations are where cost transparency meets business impact. With the right insights, business units can decide how much technology they need and what level of service justifies the cost. This empowers informed decisions around application performance, availability, and associated trade-offs.
Expert Insights from David Taylor
David Taylor is a seasoned IT Financial Management (ITFM) expert with over two decades of experience in aligning technology investments with business objectives. He has held pivotal roles in leading financial institutions, where he has successfully implemented ITFM frameworks that enhance cost transparency and optimise IT expenditures. David’s strategic approach integrates robust financial governance with structured data management, enabling organisations to make informed decisions and achieve long-term financial efficiency. His commitment to continuous improvement and innovation has established him as a trusted advisor in the ITFM domain.
Technology Leaders vs Infrastructure TeamS – DRIVING IT EFFICIENCY GAINS
Identifying IT Efficiency Gains
Deeper technical conversations between CIOs and infrastructure leaders tackle questions like:
- “Why are on-prem compute and storage so expensive?”
- “How much can we save by migrating to the cloud?”
These discussions address asset utilisation, waste, and obsolescence. They also enable right-sizing environments and optimising software licenses. A clearly communicated technology strategy ensures all optimisation initiatives align with broader business architecture and financial goals.
Finance, Sourcing, and IT Collaboration
Forecasting IT Costs with Accurate Cost Drivers in Mind
Finance and sourcing functions play a pivotal role during planning cycles. Through collaboration with IT, they can:
- Identify cost-saving opportunities before budgets are locked in
- Align forecasting and prioritisation with true cost drivers
- Ensure investment decisions deliver maximum value for cost
A strong ITFM model provides this visibility, helping teams align spending with both business and financial outcomes.
From Showback to Chargeback – Enhancing IT Cost accountability
Driving Accountability with PxQ Models
Perhaps the most powerful lever in cost optimisation is moving from showback to chargeback—specifically using a PxQ (Price x Quantity) model. This shift creates a direct link between consumption and cost. It changes the tone of conversations:
- Business units now track their own usage against business activity
- IT focuses on managing and reducing unit costs
- Together, they tackle anomalies like legacy infrastructure or unsupported systems that inflate costs
With PxQ chargeback in place, organisations see a step change in cost discipline and engagement.
Leveraging Modern ITFM Platforms for cost optimisation
Turning Insight into Action
Modern ITFM solutions empower this journey by providing:
- Automated Cost Analysis
Real-time visibility into cost drivers, inefficiencies, and savings opportunities.
- Granular Showback & Chargeback
Defensible, flexible cost allocation models that tie IT cost to business usage.
- Enhanced Budgeting & Forecasting
Better planning tools that reduce surprises and enable data-backed investment decisions.
These platforms help translate complex data into clear cost stories—and those stories drive meaningful action.
Looking AheaD – EMBEDDING FINANCIAL ACCOUNTABILITY TO DRIVE BUSINESS GROWTH
IT Financial Management is more than cost control. It’s a strategic enabler for CIOs and IT leaders to deliver business value, shape investment decisions, and ensure sustainable operations.
In the next post, I’ll explore how organisations can embed financial accountability deeper into their IT culture—aligning technology investments with business outcomes, improving planning agility, and elevating IT’s role as a driver of growth and innovation.