Author: magicora

For many enterprises, understanding the true cost and profitability of products and services is not easy. Frequently the costs related to creating products and services are complex and involve long value chains of activities and shared services such as IT. Few enterprises get this right. Executives’ inability to obtain accurate insight into their cost drivers and structures means they struggle on many levels.

Gartner outlines six pillars of Cost Transparency that, when implemented properly, will enable CIOs to run IT as a business and provide the financial transparency needed to optimise cost and value. Globally, the modern economy is shifting from an intense focus on providing conventional products to being services-based. Once enterprises have made that shift, however, it is increasingly difficult for them to accurately understand their costs, and the drivers of these costs. In a services focused world, establishing the actual costs of services remains difficult; greater levels of granularity are often needed to establish these and to deliver true cost transparency.

Total cost of ownership, TCO is a comprehensive assessment of information technology, IT or other costs across enterprise boundaries over time. For IT, TCO includes hardware and software acquisition, management & support, communications, enduser expenses and the opportunity cost of downtime, training and other productivity losses.