By Marvin Maiwald, Peter Wienand and Christina Gröger

The first part of Roland Berger’s IT study 2024 comprised a high-level survey of key IT trends before plunging into a detailed discussion of whether companies are ready for the disruption that AI is already bringing with it. A follow-up publication has now been released that addresses the tricky issue of rising IT costs. It is one thing to write a wish list of everything organizations could or should do with new and improved technologies. But what technology does a company really need? Who can come up with compelling arguments on what basis? And above all, where will the money come from?

IT budgets rise as information technology moves center-stage

The report begins with an account of the reasons for the rise in IT costs: Cloud and other IT services are devouring ever more cash as the number of companies waiving their own IT infrastructure increases. Cyber-security concerns too are driving up expenses. And at the same time, renewing key legacy systems remains expensive, but vital to keep organizational infrastructures ready for the future.

Savings are invariably the first course of action that springs to mind. But it is far from the only one, and the discussion explores relevant metrics, clear accountability and solid IT governance as sensible points of departure. More agile approaches to budgeting are likewise sketched as a way to accommodate the pace of technological change. Productivity gains are another evergreen option – for example as software engineers seek to leverage relevant intelligence platforms.

Transparent value for money?

IT controlling now comes under the microscope as the issue of opaque cost structures comes to the fore: When a company’s IT budget is shared out across multiple units or regions, for example, it becomes almost impossible to set a baseline for IT costs. Add to this the questions of how far IT services drive value for the organization as a whole, how to sensibly balance different IT needs and how to avoid rampant cost-slashing that does more harm than good, and IT controllers clearly have plenty of work to do.

From cost to value – Lessons learned

This report lays out five principles that can help companies acquire a value-orientation, explaining tools such as FinOps and technology business management (TBM) along with other useful ways to inject much-needed transparency. Isolating core value drivers in this way then empowers CIOs to make compelling investment proposals.

As with part 1 , this treatment of cost and value also concludes with a real-world case study illustrating seven steps that helped one company move from poor budgeting, ineffective cost steering and unclearly defined IT products to transparency, improved budget practices and the clear alignment of IT costs with business value.

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