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Is Expense Control Overkill?

expense control

Do we really need expense control? After all, you have an asset management system and purchasing and procurement controls in place; not to mention your IT organization has spent decades perfecting your corporate policies and procedures. It would seem that all of the bases are covered. So is expense control overkill?

Consider the following:

  • Asset Management processes and systems are designed to bridge the gap between financial systems and IT operational management systems to provide management of something physical (hardware or software). They manage a single event, with step changes–not the ongoing cost of that single asset.
  • At its core, purchasing is about minimizing the “cost” of something. Once again, it’s a single event with a focused goal.
  • Corporate guidelines, policies, and procedures are designed to provide control at a high level and may or may not provide guidance for day-to-day operations, or within a chaotic, hi-tech environment.

While all of those components are important in their own ways, they do share a commonality – they all provide insight into technology spending. However, they are not focused on specifically managing and controlling that spending.

Essentially, the speed at which technology changes today justifies expense control. Technology brings the competitive edge by changing industries and altering competitive landscapes. Physical assets can become obsolete before they are fully amortized, even three years may be too long for many hardware devices. And hardware is no longer considered a physical, tangible asset. We now have virtual devices with integrated applications, serving a specific purpose in a long chain of delivering an IT service.

This rapidly changing technology also re-defines how budgets are created and dispersed today. It is estimated that approximately 30% of technology spend is happening outside of a centralized IT group. More policies and procedures, more purchasing controls, and more asset management will not change the fact that IT has to provide leadership and guidance to support your company’s success. One way to do that is by fostering a pro-active and preemptive approach to IT solutions, rather that rushing to solve an immediate problem as it pops up.

That’s where expense control can play a key role. Instead of just managing an asset from purchase to disposal with a variety of systems, we can now view it from an encompassing, holistic expense view. Once you have the larger picture of expense, you can decide where to drill down and isolate its value in specific areas. In essence, this means moving beyond a linear dependence on management or procurement systems and embracing to a true lifecycle view of value. Instead of creating a report focused on dollars spent, you can provide information about the overall value delivered.