Answer
IT budget growth is easy to explain when spending is tied to specific assets and departments: what each laptop, server, or support contract has cost over its lifetime, who uses it, why it was bought, and when it needs replacing. Without this kind of tracking, growth looks like "IT wants more again." On top of that, some of the money really does go to unnecessary and rush purchases.
What usually drives the growth
- Justified growth: new employees and projects, replacing hardware that has reached the end of its useful life, renewing licenses and support contracts.
- Losses: rush purchases when the warehouse is empty; buying what is already sitting in the warehouse unrecorded; hardware whose loss is discovered only during an infrequent audit.
Where these losses come from is covered in the SimpleOne blog article The IT Budget's Black Hole. Your CFO needs to see that the first part grows for clear reasons and the second part is shrinking.
Checking the warehouse before buying shrinks the second part. That's how it works after ITGLOBAL.COM implemented SimpleOne ITAM: "After the need is formed, the responsible employee checks the availability of the required assets in the warehouses and reserves them. There is no need to buy extra."
What to show finance
- Costs by cost center. Which department consumes how much, and why.
- The lifetime cost of each asset. Purchase, repairs, upgrades, and maintenance, not just the purchase price.
- A replacement plan. How much hardware reaches the end of its useful life next year, and what that will cost.
- Where the number in the budget request comes from. Department needs, taking into account what is already in stock.
- What was put back into use. How much hardware was issued from the warehouse instead of being bought new.
You can go a step further and allocate IT costs to departments based on which IT systems each of them uses. Then every department head sees their share of the IT budget and the logic behind it.
Where to get the data for a finance report
If costs live in the accounting system, hardware in Excel, and contracts in email, every report is assembled by hand and is out of date by the next question. The data should live where the assets themselves are managed: the asset record holds the department, costs, warranty, and useful life. A configuration management database (CMDB) alone won't give you this: it records how infrastructure is connected, not who owns an asset and what it costs. More on this in the answer "Is a CMDB enough for IT asset management, or do you need a separate system?".
Before moving to SimpleOne ITAM, ITGLOBAL.COM kept records in Excel, and "inventory and cost analytics were impossible to obtain quickly." After the implementation, "management and partners receive reports without manual data collection."
How it works in SimpleOne ITAM
SimpleOne ITAM is an IT asset management system on the SimpleOne platform. In the asset record:
- the cost center is specified;
- the system calculates total costs from actual cost items;
- the system calculates the end of useful life from the acceptance date.
The asset record is described in the SimpleOne ITAM documentation. At ITGLOBAL.COM, SimpleOne ITAM is used to collect needs by organization, analyze and reserve stock in the warehouse, and plan and record procurement costs in the asset. Reports on issued assets, balances, and costs by asset and contract are generated for any period. Learn more on the SimpleOne ITAM page.
