For IT leaders, being able to have more leverage is a huge benefit of IT cost transparency as it allows them to more confidently communicate the reasons behind costs and their overall value to the company. By putting things into terms for even non-IT leaders to be able to understand and analyze, the business can start to put plans into place on what makes sense and what does not. One of the biggest benefits of IT cost transparency is that it provides a complete view of where money is actually being spent throughout the department. This information gives IT leaders and stakeholders the ability to make accurate decisions regarding current needs as well as future innovations.
Car buyers routinely enter the showroom armed with detailed breakdowns of wholesale auto prices that have been downloaded for free from any of a dozen Web sites. For manufacturers, cost transparency means consumers will be better able to infer a product’s manufacturing costs, making it much harder to impose large price premiums. In the long-term, these have strategic implications for organizations that lack the required skill set to pivot IT from a defensive to a strategic enabler position to support growth and new revenue models. Then starting on January 1, 2024, these shopping tools will be required to show the costs for the remaining procedures, drugs, durable medical equipment and any other item or service they may need.
Experience
For McGraw Hill, having a transparent framework that drives smart investment strategies and a common language across this 135-year-old company is critical. Known as one of the “big three” education publishers, McGraw Hill must stay ahead of their competitors with innovation and value delivery. Join Yuliya Oberman, Finance Director for McGraw Hill Education and Eileen Wade, General Manager of the TBM Council as they discuss how TBM is essential to McGraw Hill’s enterprise resource strategies and digital transformation journey. Both of these expenses will likely sit in the same part of the GL, on the same account line and probably in the same cost centre. IT cost transparency is designed to address this complexity, by establishing the products and services, what they cost and how they relate to each other. Better-quality products, creative pricing strategies, imaginative bundling, and innovative thinking can all help keep cost transparency from overwhelming a seller’s ability to maintain brand loyalty and obtain relatively high profit margins.
When IT cost transformation is set up as a discrete one-off initiative, the risk is that it is typically driven top-down, requiring high upfront activities to align while at the same time will be quickly outdated. This pattern is particularly prevalent in times of crisis, where there are very specific mandates to achieve a cost saving target. But even full health plan compliance won’t automatically give consumers the information they need.
The relevance of IT cost management and transformation
More than ever, as COVID-19 has accelerated the pace of digital transformation, the role of the IT organization has been put under the spotlight, to pivot from that of defensive position to that of business and strategic enabler. The opportunity is ripe for IT organizations to create some fundamental shifts in IT cost structure, governing IT cross-functionally and increasing collaboration with CFOs and the business while reducing a high dependency on 3rd party providers. Together, these measures will enable a more sustained approach to IT it cost transparency cost transformation that likely lasts beyond the current crisis and can convert the rusted IT department to a strategic business partner. The rule requires most private health plans, including group health plans and individual health insurance market plans to disclose pricing and cost-sharing information and fulfills a key element of President Trump’s Executive Order on price and quality transparency. The task force developed the principles and standards with broad consultation and recommendations from the higher education community.
- The program makes clear how EC will cover out-of-pocket costs for undergraduate tuition and mandatory fees for new, eligible incoming undergraduate New York State students.
- A serious skills shortage also adds to the challenge of making the internal IT organization sustainable, cost effective and innovative.
- There are multiple factors that must be considered when moving towards IT cost transparency and it is necessary for organizations to be properly informed of the main elements involved.
- When a representative can explain everything in terms that are understandable for a non-IT person, businesses can analyze the information on their own and make decisions on whether they need something from the list or not.
- She said the initiative can also encourage younger, and particularly low-income, students to apply to colleges.
- Technology companies can create additional price comparison tools and portals that will further incentivize competition, as well as allow for unprecedented research studies and data analysis into how healthcare prices are set.
Because the Internet allows customers to easily share information with one another, smart pricing is likely to create widespread perceptions of unfairness that may prove devastating to businesses in the long run. Consumers will be unhappy if they believe they have paid more for a product than someone who was more persistent, more adept at bargaining, or just plain lucky. The Extensible Markup Language (XML) software protocol is replacing the Web’s traditional Hypertext Markup Language (HTML).
Internet technology erodes the “risk premium” that sellers have been able to exact from wary buyers.
If you are a regular reader, you will know I have previously covered a number of the benefits of cost allocation, and it is no great leap to realise that these all also apply to cost transparency. Although decreasing expenses is one of the benefits of cost transparency, there are many other advantages that must be considered. Yet in the retail industry—and perhaps in other industries where customers may take for granted how much effort and money goes into producing a good—many firms may benefit greatly from sharing cost figures. Or perhaps it’s simply a matter of consumers appreciating a little raw honesty from the corporate world. This discrepancy was overlooked for a five-week period, creating a natural experiment that compared how customers reacted to the three wallets that outlined costs versus the two—bone and tan colors—that did not. The researchers found that the introduction of the cost transparency infographic increased daily unit sales on a per-color basis by 44 percent.
Many organizations aspire for a cloud-native posture, however few have the time, resources and budget to transform into 100% public cloud operations. Equifax has broken through those barriers to modernize its infrastructure globally — driving faster innovation for customers, more business agility, and stronger cybersecurity. Hear from Manav Doshi, GM, Technology Solutions on how the Equifax team is rebuilding a century-old company, with a real-time approach to optimizing cost and revenue growth in the cloud.
Costing and cost transparency
For some CIOs, performance metrics serve to indicate that the IT organization is ensuring that the “trains are running on time” and lack anything that demonstrates the business value of IT. Others understand that cost transparency will not aid the enterprise unless value and transparency are communicated properly and through a constant feedback loop. This could be electronic IT scorecards, as they enable CIOs to monitor performance throughout the fiscal year or planning horizon. “Increased demand for IT projects and services, coupled with the challenges that arise as organizations move to digital business models, has heightened the need for CIOs to do more than simply manage the IT budget,” says Jim McGittigan, research vice president at Gartner. “CIOs serious about making long-term changes on the financial side of their IT organization need a framework to plan for these changes.” Making the right technology investment decisions today is the key to tomorrow’s success.
All that information has a way of making a seller’s costs more transparent to buyers—in other words, it lets them see through those costs and determine whether they are in line with the prices being charged. About 80% of a typical IT budget is devoted to “keeping the lights on,” leaving little room for cuts. But we can show you how to simplify and refocus your IT, strengthening your organization to pursue your most promising business priorities. We can drive results in the short-term while producing sustainable savings through increased productivity and efficiency.
ApptioOne: Unlock the Value of Your Tech Investment
Staples.com has decided to maintain selective pricing; customers are asked to enter their zip codes before they can obtain prices. The company’s managers realize that its everyday-low-price positioning can be credible only if the posted prices are the same for all buyers. The Internet, however, presents a very different shopping experience, one that appeals to people’s cognitive faculties.
She has advised clients in banking and insurance on getting the best values from technology investments and enablement, such as core system modernization, strategic IT investments, IT operating model optimization and organization-wide digital transformation. When the topic of IT cost transformation is discussed and governed within the IT department only, the risk is high that it is treated as a list of one-dimensional cost levers only. Without partnering with the business to truly tie the values and services provided by technology investments, IT department will find it hard to pivot out of the defensive corner into a strategic business enabler. In theory, this level of transparency could force healthcare prices down (though some economists warn it could also encourage some providers to raise their rates if they feel they’ve been underpaid). When the rates health insurers negotiate with healthcare providers are on full display, the companies paying for employer-sponsored health benefits may find reason to question insurers’ negotiating effectiveness. How does a 170-year-old financial institution deliver a new, fully modernized technology strategy while supporting 24×7 service to their customers across a multitude of platforms, including point-of-sale, mobile, and web services?
Why is IT cost transparency needed?
“When firms communicate the effort that went into making a good, consumers tend to value the product more.” Before the rise of e-commerce, most companies attempted to build their brands by using sensory cues that required “affective processing,” or the words, images, sounds, and smells that speak to people’s emotions. That strategy has paid off handsomely for companies like Tommy Hilfiger and Budweiser, which have relied heavily on seductive visuals in advertisements to achieve a premium image—and thus to earn very high margins on their products.