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complex and costly to manage. The complexity is due in part to the natural evolution of
the businesss dependence on IT, and to the piecemeal and sometimes divergent nature
of demands on IT. Whatever the cause, complexity begets ambiguity and is therefore
undesirable.
CIOs are often baffled at the implications of operational and cost-induced ambiguity.
They are expected to keep IT costs in check, while maintaining operational excellence
and satisfying the need to grow and innovate. It is, from the outset, a task doomed to
failure if one doesnt have a firm handle on costs. Operational complexity is not the only
reason it is difficult to establish the true costs of IT. The following analysis highlights
some factors that make determining the true cost of running IT difficult:
such applications, servers or peripheral devices, which do not make it to the IT budgets
and fall through the cracks.
BRAND POSTMaking
Perception is reality
IT budgets, not the total cost if IT, are reported and discussed among the C-level
executives and the company board, and are therefore perceived to reflect the total cost
of IT. They do not, however, represent the full costs and are therefore misleading.
Budgetary constraints
To meet the budgeted operating expense targets, IT organisations often pull the plug on
maintenance activities and divert resources people and so on to activities that do
not impact profit and loss, which are often separately funded by the business. The
practice not only confounds the true cost of IT, it compromises ITs keep-the-lights-on
function by neglecting the otherwise essential maintenance activities.
Moral hazard
CIOs often find themselves explaining the value IT creates to justify increasing IT
budgets. It is not conducive to revealing the true costs of IT, nor does it provide incentive
to determine the cost. As the saying goes: What cannot be measured, cannot be
controlled. The new-age CIO must take a quantum leap and establish credibility as a
leader by determining, owning and controlling the total cost of running IT.