Is your IT department running a profit?

Up until now, it’s been broadly assumed that performance management was the one area of IT that actually WASN’T part of IT, but the purview of the business user. Well, don’t look now business users, but IT is starting to get in on the act in this market as well.

As CFO’s scour their organizations looking for ways to cut costs and streamline operations, the IT department is a prime target. Oh not in the ways of the past—after all, the standardization wave has come and gone, and CIO’s are already running lean and mean in their servers and ERP choices and footprints (see dot com bubble bust and lessons learned, circa 2000).

But what about measuring their efficiency and effectiveness in how they run their operations? Are they really that lean? that mean? And what are the impact of the costs that the IT department is incurring on behalf of the various departments around the company? Are they making you more profitable? Or are they just adding additional carrying costs to your internal P&L? How much DOES it cost your sales team when you implement a new CRM system and purchase new laptops? Many companies don’t know, since they lump the cost of these purchases into the IT budget.

However, this is increasingly changing. More and more organizations are discovering the benefit of IT Services Costing, whereby companies can get the insight they need into the costs associated with running and maintaining a full-service IT shop, and fully load their departmental financial statements with an accurate reflection of the costs of maintaining the new system that marketing just HAD to have.

Getting a handle on your cost structure is becoming table stakes for high performing companies today. And finding out where the costs are coming from is a great place to start. Next time the question comes up, start with IT.