Gartner Research

Transform Fixed I&O Costs Into Variable Costs for Better Expense Management

Published: 20 February 2013

ID: G00238673

Analyst(s): Biswajeet Mahapatra

Summary

Variable, as opposed to fixed, I&O costs will help monitor and manage costs at a granular level, and identify better alternatives. However, the process of converting fixed costs to variable costs can be tedious and time-consuming for IT leaders, and can have adverse effects if not done correctly.

Table Of Contents
  • Key Challenges

Introduction

Analysis

  • Use Variable Costing to Gain Insight Into Factors That Drive Costs
  • Follow a Six-Step Process to Convert Fixed Costs to Variable Costs
    • 1. Understand the Typical Business and IT Requirements of Each Business Constituency (Group, Function and Geography)
    • 2. Develop an IT Strategy
    • 3. Identify Major Activities and Processes
    • 4. Identify and Break Down Fixed Costs
    • 5. Establish an Asset Management Strategy
    • 6. Develop a Variable Cost Management Strategy
  • Be Aware of the Cautions While Going About the Cost Conversion Exercise
  • Be Mindful of the Benefits of Variable Costing in IT
  • Bottom Line

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