November 24, 2023
Transparency in IT spending can turn costs into assets
Information technology (IT) is a vital part of any company but advanced computing, networking and connectivity systems can be costly. If chief financial officers (CFOs) are involved in the IT procurement process, they can gain complete visibility into IT spending and can make decisions on investments that offer greater returns for the business.
In enterprises, IT decisions largely come from the chief information officer (CIO). However, if CFOs have their input too, the company can benefit in the long run. As custodians of investments, CFOs scrutinise all company costs. They can turn IT systems into strategic assets that offer productivity and financial returns.
To provide this transparency into IT spending, CFOs need solutions that provide clear insights into expenditure and usage. As a large portion of operational expenses, IT spending needs to be transparent for cost management, control and the assessment of ROI. CIOs must work closely with CFOs to provide a greater understanding of the productivity, security and financial benefits of IT infrastructure and advanced IT solutions.
The importance of collaboration on IT spending
Cloud computing, automation and cyber security are emerging technologies that transform business and add value to a company. However, these digital solutions can be complex to set up and manage, so expertise becomes crucial. The costs of digital transformation can be difficult to predict accurately, so good governance and input from CFOs and CIOs are needed to prevent runaway costs.
Cloud migration, for example, can be a fairly costly exercise when entire on-site legacy systems and applications need to be moved. To extract the maximum value from the migration, the right input is needed. CIOs bring experience and knowledge of IT architecture, whereas CFOs bring cost analysis and management skills to the collaboration.
The cloud can save costs if the migration is done properly. This requires collaborative management and clever thinking when it comes to expenditure. The cost of cloud migration should be considered as part of the business case as this exercise will deliver scalability, efficiency and unlimited storage in the future.
This shifts capital expenditure in on-site IT systems to operational expenses through flexible payment structures. The CFO will need to manage these cost allocations to drive operational efficiency and ensure good investments in the right IT solutions. Many people consider cost optimisation to be minimising bottom-line expenses, but it’s actually about investing strategically in infrastructure that delivers returns.
The role of IT financial management
IT financial management (ITFM) is the practice of managing an enterprise’s digital expenses. These costs are tracked on the company’s ERP ledger, which tracks external spending and reporting. ITFM allows managers to also track the consumption and uptake of IT systems to better understand the total cost of ownership.
Cost transparency needs to lead to accountability and responsibility within the company. This is where ITFM drives business value, as any spending on new technologies can be tracked closely and the benefits viewed holistically. Cost optimisation within ITFM is a long-term strategy that offers sustainable redeployment of tech spend.
It’s an essential component of success when looking at investment in new technologies. ITFM allows companies to remain competitive and efficient through tracking and analysing their IT spending, which provides a structured approach to allocating resources, managing budgets and making informed decisions.
Importantly, ITFM helps enterprises to align their IT spending with business goals. CFOs can direct these costs towards technologies that generate ROI – essentially making IT systems valuable assets. This ensures that IT departments are aligned with the company’s strategy and that there is no wastage of resources or spending.
The partnership between CFOs and CIOs is vital for companies that prioritise digital infrastructure. Working with a reliable and reputable IT services provider can further improve cost optimisation and investment in the right technologies.
SEACOM is a leading IT services provider in South Africa. We own and manage an extensive network of connectivity infrastructure that forms the foundation of our cloud, networking and communications services. Our experts can help your enterprise set up and manage its IT systems. For more information about our various services or to get a quote, email us at firstname.lastname@example.org or leave us a message.
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