Definition

IT cost structure

IT cost structure is the relationship among different types of expenditures within a larger IT budget

Effective planning around an IT cost structure should consider long-term business investments over several years, followed by the creation of line items in the budget that can be categorized and tied to specific costs. Four categories that contribute to the overall IT cost structure are:

Operational costs - the price of running of IT services on a day-to-day basis.

Staff costs - total of all expenditures associated with hiring, training and retaining an employee.

Core costs - general operating expenses that have no direct relationship to the production or selling of a company's goods and services. Also known as overhead.

Capital costs - money invested by a company to acquire or upgrade fixed, physical, non-consumable assets, such as buildings and equipment or a new business.

Many IT expenses are fixed, allowing limited options for IT executives looking to reduce expenditures. In building and trimming an IT cost structure, typical cost management initiatives include rationalizing IT assets and resources and renegotiating vendor contracts. The chief information officer (CIO) is primarily responsible for the strategic decisions in the IT department, including the IT cost structure, and determines whether proposals fit within the IT budget.

Contributor(s): Bianca Rawson
This was last updated in August 2013
Posted by: Margaret Rouse

Email Alerts

Register now to receive SearchCIO.com-related news, tips and more, delivered to your inbox.
By submitting you agree to receive email from TechTarget and its partners. If you reside outside of the United States, you consent to having your personal data transferred to and processed in the United States. Privacy

More News and Tutorials

Do you have something to add to this definition? Let us know.

Send your comments to techterms@whatis.com

There are Comments. Add yours.

 
TIP: Want to include a code block in your comment? Use <pre> or <code> tags around the desired text. Ex: <code>insert code</code>

REGISTER or login:

Forgot Password?
By submitting you agree to receive email from TechTarget and its partners. If you reside outside of the United States, you consent to having your personal data transferred to and processed in the United States. Privacy
Sort by: OldestNewest

Forgot Password?

No problem! Submit your e-mail address below. We'll send you an email containing your password.

Your password has been sent to: