Modern businesses are increasingly more reliant on IT services as technology becomes essential. Despite the vital role IT services play, there is still contention over how much should be spent on the service. Many CIOs find it difficult to justify spending when companies still underestimate the importance of technology we take for granted. It is challenging for CIOs to lower IT budgets when the rising complexity of technology calls for more expensive equipment and more qualified expertise. Below are a few reasons why the cost of IT remains a mystery to most companies as well as the struggles faced by IT departments when it comes to costing.
IT departments are faced with the task of charging an appropriate fee for their service. This is increasingly difficult as they have to account for several factors such as the number of users, the complexity of the work and the labour involved. A business unit can be charged for the number of users because of the volume of computers and accounts which need attention. This must also find a way to match the level of expertise needed to solve the problems, i.e. whether it is a complex service to multiple users or a simple service to multiple users.
IT funding is often not managed correctly. Not all expenses are brought forward through the right channels, and often certain expenses go uncategorised, causing problems for companies. The CIO has the difficult task of assessing which expenses belong to the IT budget and which do not, and the lines are often blurred. IT-related expenses also cause confusion as they are not officially made by IT yet it falls under technology expenses.
The full cost of IT services can only be estimated before their completion. This estimate is what is discussed and approved by the company, but it is often not what the end total will be due to unforeseen expenses. The volatility of this situation makes it difficult to truly know what IT will cost and this can cause distrust as well as frustration.
Budget limitations can limit IT department activity and often leads to the neglect of maintenance services as the company cannot or will not pay for it. Maintenance is essential to the running of technology and an outdated or faulty system can have negative consequences for business if services fail. Companies often do not value maintenance of this sort because they do not understand its importance or are unwilling to spend money on it.
CIOs have the uncomfortable task of having to explaining and justify IT budgets which undermines not only the CIO but also the capabilities of the IT department. It creates an expectation of proving worth instead of valuing expertise. An overall problem faced by IT is a business’ inability to see their value and importance, directly resulting in unfair payment.
