- Paperback: 214 pages
- Publisher: Financial Times/Prentice Hall; 1st edition (March 20, 2000)
- Language: English
- ISBN-10: 0273649434
- ISBN-13: 978-0273649434
- Product Dimensions: 9.2 x 7.5 x 0.5 inches
- Shipping Weight: 15.5 ounces (View shipping rates and policies)
- Average Customer Review: 3.2 out of 5 stars See all reviews (3 customer reviews)
- Amazon Best Sellers Rank: #8,020,733 in Books (See Top 100 in Books)
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Taking Control of It Costs: A Business Managers Guide 1st Edition
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"In most businesses in which I have been involved throughout my auditing career there has been a certain mysticism attached to IT. Even in this modern age there are many managers who continue to regard a computer as a magic black box. Where they have learnt how to switch a pc on, there are not many who hand on heart understand the technology. Nor should they be expected to. And yet not many of these same managers would dream of entering into a major capital project without a full cashflow analysis or establishing a project management programme. The IT department in any business is a key part of the undertaking. But it can easily become a bottomless pit. Instead of adding value to the business it can fast become a runaway cost. Taking Control of IT Costs is an excellent model for the layman to get to grips with the pitfalls. "
Colin Harris CA (SA), Director of Internal Audit & Business Continuity, St. John Ambulance, London
From the Back Cover
"How often have you heard of an IT project that went over budget or over time...There are lots of books about why this is so. This is the first book to show managers on the ground what to do about these problems."
Have you been wasting money on IT? Did your company spend too much on Y2K? Is your business about to be 'Amazoned' because you are spending too much on IT? (typically just adding layers of bureaucracy and barriers to doing business) Are there any areas of IT under-investment in your business?
While managers worry that they are being hoodwinked into spending too much on IT, they may also be penalizing key areas of IT investment. Are you certain that your organization hasn't spent too much on Y2K and not enough for competing on the Internet? What is your organization doing right now about Internet-enabled smart procurement?
A practical guide to understanding and managing IT costs and increasing IT efficiency - getting better value from your IT budget. This book demonstrates how to achieve this and thus reduce IT costs while improving business performance.
Any manager will be able to use this book to get at least 20% better value from their IT spend
A quarter of all money/investment on IT is wasted
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Top Customer Reviews
The first step is to analyze cost management, and the book provides a three-step healthcheck to help you to get a handle on this aspect. Second, you are shown how to trace cost allocations in a manner that borrows heavily from activity-based cost management techniques. The next step in the book's approach is to develop a strategy and supporting tactics for achieving efficiency. Then chapter on key performance indicators and benchmarking shows you what you should be measuring and how to compare your cost management posture with industry norms for your industry segment. This chapter also gives caveats about benchmarking to which you should pay close attention if you are new to benchmarking or frameworks because it's easy to lose sight of the objectives (cost management) when you're exploring this aspect of management. The book concludes with chapter that goes deeper into strategic planning, and two invaluable appendices on accounting techniques and typical cost structures.
What I particularly like about this book is there is no theory, silver bullets or preaching. It gives an approach that is not only achievable, but is consistent with standard practices in cost management in and out of thr IT domain.
As I read through this book I began to gain a wider view of how to go about analyzing service delivery and support costs through a systematic analysis of cost allocations. The three IT expense health checks in chapter 2 were immediately useful because they addressed key performance indicators that show how well costs are managed, the impact standardization has on controlling costs, and the importance of gaining control over physical assets (this is directly related to my original reason for reading the book). Another gem I gleaned from this book is the fact that fixed costs are like a shell game - there is an apportionment of fixed costs, which are finite and driven by a budget, among functional areas. The trick is to make sure that the budget for fixed costs is apportioned in accordance with the importance of the areas to which they are targeted. Also interesting is the premise that budgets should be based on a mix of short- and long-term initiatives, which is different from common practice in that too often budgets are allocated to initiatives strictly based on priority or perceived importance.
This book deals with strategy as much as cost control, which is logical since both have some obvious relationships. Here too the book contained some excellent advice, the most sensible of which is that methodologies are not as important to a strategy as understanding the strategic issues and building an integrated team. This applies to both projects and operations, and should be carefully considered by anyone who rushes out to buy the latest tools (most of which lock you into a methodology) before thinking through the real goals and objectives. The two appendices were invaluable resources for reviewing accounting principles and giving a complete cost breakdown structure that is typical of most IT organizations.
I would also note that the book is rather dated and does not even touch on obvious cost-reduction topics such as virtualization.
As the description states, "Senior managers will find this briefing an invaluable guide to imposing normal cost discipline on IT spend - within the IT department or elsewhere - without the need for technical knowledge of IT. " This book may have some value for business managers who want to allocate metrics to a process they do not understand, but metrics are only a starting point for such a discussion.
If you want to seriously challenge IT costs in your organization, I would instead suggest a different approach:
* Do look at metrics, but also
* Ask your IT managers to define the areas that they do well - what areas of IT does your organization do so well that they could potentially offer cost-competitive services to other organizations (the areas that do NOT fall into this category are areas for improvement)
* Ask your IT managers to define services or technologies that they cannot cut for political or internal reasons, but which might make sense to cut for business reasons - get those on the table even if you aren't going to cut them
* Ask your IT managers to suggest cost-neutral opportunities for improvement
* Bring in a consultant and have the consultant do 1 on 1 interviews with enough low-level employees that everyone gets bored. If the IT organization has problems that aren't obvious, someone will eventually open up and tell the consultants some painful reality that IT managers don't want to talk about.
* Understand that cost improvement in IT takes time and in some cases short-term investments, and that the business side needs to actively engage with IT in a systematic manner over an extended period of time. This is equally true of both cost improvement and business improvement projects.
* For each improvement opportunity, try to understand why the IT organization hasn't already made the change - is the IT department resistant to change? Lack of energy/bandwidth/resources? High risk relative to reward? Lack of organizational support? Or some other constraint? Hiring consultants might get you those answers, but a good working relationship and an occasional beer after work might be just as effective.