Results of the survey indicate an alarming disparity between the ability to track and understand how much it costs to deliver IT services to the business, and the value that information provides. Today, only 12 percent of IT costs are billed back based on modern accounting principles such as activity-based costing or consumption-based allocation, and 56% of companies have no regular financial reporting process. Not surprisingly, this lack of transparency manifests itself in the way CIOs feel about reporting back to the CEO on how their department is investing in IT. Nearly 62 percent of respondents cited being "not-at-all confident" or only "somewhat confident" when asked if their IT departments could provide an accurate answer within 24 hours on specific, annual spending levels for IT services such as email, ERP, and desktop systems. As a result, the majority of CIOs (86 percent) believe they are only 'somewhat' or 'fairly well' equipped to make accurate cost-based or ROI-based decisions.
During an era when many of the world's largest organizations are spending billions of dollars on information technology, IT cost management processes and capabilities are significantly behind those of manufacturing and supply chain functions. While many leading manufacturing companies have rigorous systems for tracking the cost of each good or service produced, understanding which services are profitable, and itemizing spending per product line, there is a significant gap between IT's desire to offer greater transparency and the capabilities required to achieve this.
Other key survey findings include:
- When asked how well their CEO and line of business managers understand the cost per IT service, 72 percent of CIOs stated that there is only 'minimal' or 'some' knowledge of the cost per IT service within their senior management ranks.
- Fifty-six percent of CIOs have no regular communication processes regarding IT service cost and no transparency on the breakdown of their budgets based on IT services.
- Only 12 percent of CIOs reported using a specific solution to track and allocate IT costs.
- Of those organizations that update their TCO for IT services calculations, only 12 percent do so on a monthly basis, with close to 50 percent conducting annual updates. None of the CIOs surveyed are conducting updates more than once per month.
- Seventy-eight percent believe it would be valuable to track the annual total cost to deliver and maintain each IT service and 44 percent believe it would be 'extremely' or 'very' valuable to do so.
- Seventy-four percent of CIOs stated that showing line of business managers the cost and usage (frequency or volume of use) of each IT service as a way of discussing the demand for those services would be valuable. 54 percent believe it would be 'extremely' or 'very' valuable.