Unraveling the mystery of IT costs

According to the September 2005 edition of The McKinsey Quarterly Newsletter, increasing the level of transparency in IT can help leaders of business units to understand the link between consumption and costs.

Below is an edited excerpt (full text available only to Premium Members):

• Few companies fully understand their IT costs and why those costs keep rising.


• An IT cost transparency program gives business managers a catalog of IT products, bills showing IT usage, and management reports that segment costs by product type and business unit.


• Once a business unit sees the link between the products it consumes and their cost, it starts making smarter choices. At the same time, IT improves its cost-management skills.


• When IT and the business work as partners, they can cut IT costs and make IT investments that add more value.