TABLE OF CONTENTS In this chapter we will address cost as one of the two drivers for IT performance. In Chapter 5 value will be addressed as the second driver. Current practice in most organizations is a focus on managing, say optimizing, the costs of IT. The authors want to emphasize that optimizing the cost of IT always has to be seen in combination with the improvement of the value of IT.
In this chapter the terminology of IT cost will be explained. Although the term cost of IT is regularly used in several books by consultant firms, etc., most people have different definitions. In the first section we will explain different views of IT costs. After the introduction on IT costs, two IT accounting models will be introduced. These models give insight into IT costs and structure and section 4.3 will describe how they can be used. Following the introduction of the two models, the control of IT costs will be explained in section 4.4. Finally, the techniques for IT optimization will be described.
IT costs can be interpreted in many ways. IT product and service vendors use terms such as decrease overall TCO or decrease cost to market their products. What does this mean? The next question should always be which cost or which cost model? In this chapter an overview of the main stream models on IT costs is given and the terminology used is explained. But let us start with some definitions to...
