Like many people, every so often I check my accounts online and other statements to see where I’m spending money. I use this information to make decisions about how to manage my budget more effectively based on my priorities. Yes, I know that I could reduce costs if I ate more meals at home and did less traveling, but I’d rather cut back expenses in other areas first. So, I looked closely at the services I was receiving and what they were costing me. By reviewing detailed statements, it was easy and painless to get rid of the monthly charge for an extra cable box on a television I rarely used. By raising my deductible on an insurance policy, I found another way to save money. After going through detailed monthly statements of various bills, I discovered additional services I was receiving that I no longer really needed.
I was able to make these budgeting decisions based on my priorities, because I had detailed statements on the cost of services. IT needs that same kind of visibility — an understanding of the costs of delivering services. And the business users of IT need itemized costs of the services provided to them. This is known as service cost management, and it gives customers a business-oriented view of their IT costs.
With service cost management, IT can compare the costs of services offered to industry standards for those services and make informed decisions about them. The costs include hardware, software, labor, and more. Business customers will also know what they are being charged for each service and how it impacts their budgets. This knowledge helps them make choices about which services to keep, which ones to replace, and which ones need more investment.
The IT organization at BMC Software followed this service cost management approach using BMC technology and achieved incredible results. They offered these strategies for success:
- Understand each business unit’s strategy
- Define your service catalog so that it makes sense to the business
- Define and identify the costs
- Start with estimated percentages for each business service’s allocation for shared services
- Align work entities to business services
- Automate to increase efficiencies
Read this thought leadership article to learn more: How to Analyze the Cost of IT Services