You can’t manage what you don’t measure
The challenge of understanding your IT spend
With the full impact of a post-Covid economic chill looming, many corporates are looking to optimise costs and are accelerating rationalisation and cloud migration programmes within IT to aggressively cut opex. But in our experience, many companies are not measuring all aspects of on-premise IT spend, and this can lead to problems because, as the old adage goes, you can't manage what you don’t measure.
Without a full breakdown of all related spend and an accurate inventory of equipment – including virtual server infrastructure and associated software licences – it’s impossible to accurately attribute costs to application owners.
Historically this may not have mattered much. IT costs were seen as sunk and there was less of a need to account for them by department or application. But in todays’ product-led organisations, to maximise impact, investment decisions and savings targeting should be based on fact rather than guesswork.
Toward a better model of cost attribution
A solid approach to cost attribution today will help justify tomorrow’s Cloud migrations and prepare product managers for the inevitable financial management of their Cloud resources.
The Cloud business case will likely only look attractive if you have a full view of as-is costs. And once migrated, IT will face a backlash if Cloud environments are perceived as more expensive than on-premise – which could well be the case if the on-premise baseline was not complete.
Whether on-premise or in the Cloud, effective measurement is key to underpinning comprehensive cost management. In our view, such cost management requires:
Costs to be attributed directly to the product or application owner;
Cost owners to have access to resources with the skills and incentives to optimise environments, and thus control costs;
Active incentivisation with any savings made going to further product innovation.
How can Refractis help?
Refractis has extensive experience in helping our clients to deliver IT projects which make a big difference to their business, their IT operations and their bottom line.
We can help you to understand your IT estate and the associated costs, and to construct business cases for major programmes such as legacy infrastructure consolidation and Cloud migrations.
When planning these programmes our approach is to:
Start with the basics - understanding your sources of data before rushing to buy or implement migration tooling;
Pursue optimisations in order of budget impact;
Watch for trends and cost increases to spot outliers and tuning opportunities.
Contact us to see how we can help you build a comprehensive product cost model and to assist you with your future transformation activities.