IT Cost Management is a Board-Level Priority

Tony:
Hello, I’m Tony Mangino from TC2, and this is Staying Connected—the podcast where we talk about what really matters to enterprise buyers navigating today’s technology and sourcing decisions.

Today we’re talking about IT cost management— and not as merely a “finance cleanup exercise,” but as a board-level priority.

If you’re a CIO, a VP of Infrastructure, a sourcing leader, or anyone accountable for major run-rate spend across cloud, software, telecom, and infrastructure, you’ve probably felt this shift. Cost questions used to be periodic – budget season, a cost reduction mandate, a big vendor renewal. Now it’s continuous and it’s tied directly to governance and risk.

To help us unpack what this looks like from an executive perspective, I’m joined by Theresa Knutson, a fellow TC2 Director and leader of TC2’s IT Cost Management practice.

Theresa:
Thanks, Tony. Great to be back with you.

You’re right–IT costs are no longer just an operational concern. It’s a board-level issue. The CIOs challenge isn’t simply to “reduce spend.” It’s proving the organization’s technology investment is disciplined, strategic and aligned to business outcomes.

And in most boardrooms, it shows up as four questions:

1. Do we actually know where the money is going?
2. Are we getting measurable value from what we’re buying?
3. Can IT fund future initiatives without increasing risk?
4. Are we missing savings opportunities? (i.e., waste)

Tony:
The traditional model—annual budgets, periodic vendor renegotiations, maybe a cost reduction program every few years—just isn’t enough anymore.

Modern IT environments are hybrid, highly distributed, consumption-based, and constantly changing. Which means cost isn’t fixed. It’s dynamic—and often partially invisible, that is, until it becomes a problem.

Theresa:
Exactly. And the complexity isn’t just technical—it’s commercial. Contracts, billing constructs, usage models, taxes, and regulatory fees vary by vendor and by product. Even when the technology is “working,” the spend can behave unpredictably.

For boards and executive committees, unpredictability is risk. And unmanaged IT cost is increasingly viewed as a governance gap—especially when it affects forecasting, compliance exposure, or the ability to fund strategic initiatives.

CIOs who treat cost management as a strategic capability—not a spreadsheet exercise—are better positioned to maintain control, credibility, and influence.

Tony:
From what you’re seeing, where does IT cost risk most consistently surface at the board level?

Theresa:
Typically in three areas. And what’s interesting is the board doesn’t always call them “IT cost problems.” They call them governance, risk, and accountability problems.

First Cloud Spend Without Financial Governance

Cloud adoption accelerated speed—but often outpaced financial controls.

Boards get concerned when they see things like:

• Costs that can’t be forecasted with confidence
• Limited linkage between consumption and business value
• Post-fact explanations instead of forward-looking controls

Cloud is powerful, but without guardrails, it creates volatility. And volatility becomes operational risk—because when spend spikes, teams panic, projects get frozen, and trust erodes.

Tony: And it’s not just “cloud is expensive.” It’s “we don’t know why it’s expensive,” and “we can’t predict what happens next month.”

Theresa:
That’s right. Predictability is what boards want.

Secondly,  Software and Licensing Exposure

Software portfolios have grown rapidly—often without centralized oversight. Boards are increasingly sensitive to:

• Underutilized licenses
• Auto-renewing agreements that drift upward over time
• Redundant platforms acquired through decentralization or M&A
• Vendor concentration risk and audit exposure

To a board, this isn’t just waste—it’s a signal that internal controls may not be tight enough.

Tony:
And software is one of those categories where spend can feel “sticky.” Once it’s in, it’s hard to unwind.

Theresa:
Yes—and that’s why governance matters more than heroics.

And Third:  Legacy Technology and Telecommunications as Structural Cost Risk

Legacy platforms are more than technical debt. They absorb disproportionate run costs, increase operational and security risk, and constrain investment capacity—especially as legacy service costs rise over time.

From a board perspective, legacy isn’t a “sunk cost.” It’s an ongoing liability with compounding impact:

• Higher run-rate
• Greater outage and security exposure
• Less funding available for modernization

Tony:
And we’re seeing this particularly in telecom—legacy circuits, old voice platforms, older access types—where suppliers are raising prices, support is thinning out, and enterprises are paying more to stand still.  We’ve been talking a lot about this “technology debt” on Staying Connected lately.

Theresa:
Exactly. And that becomes a board conversation quickly: “Why are we funding yesterday’s infrastructure instead of tomorrow’s capabilities?”

Tony:
So leading CIOs are changing the narrative. Instead of defending budgets, they’re presenting the business with investment choices.

What does “effective IT cost management” look like at the executive level?

Theresa:
It’s built on four principles:

1. Transparency
   Clear, defensible visibility into IT spend—by service, platform, supplier, and business outcome. Not just totals. Not just GL codes.
2. Control
   Financial guardrails embedded into decision-making—especially for cloud, software, and infrastructure consumption. Controls that operate in the flow of work, not after the fact.
3. Accountability
   Shared ownership across IT, finance, and business leaders. If the business consumes, the business has visibility and responsibility—not just IT.
4. Sustainability
   Ongoing optimization—operating discipline—not a one-time “cost out” program that fades after the executive sponsor moves on.

When CIOs can demonstrate those four elements, the board discussion changes from:
“Why does IT cost so much?” to: “How should we allocate technology investment to drive the business?”

Tony:
When IT cost management is executed as a priority, what outcomes do you typically see when its done well?

Theresa:
Organizations usually see:

• Sustainable cost optimization—often in the 10–30% range, depending on categories, maturity, and what’s been done before
• Improved forecast accuracy and spend predictability
• Reduced vendor, audit, and compliance exposure
• Stronger alignment between IT spend and corporate strategy
• Increased capacity to fund innovation without expanding budget

The value often comes from identifying previously unknown opportunities—leakage, overbilling, misaligned rate structures, unused services, contract drift, consumption inefficiencies—things that don’t show up in a normal operational cadence.

For boards, the value is confidence. For CIOs, it’s strategic latitude.

At TC2, we work with CIOs to elevate IT cost management to an executive discipline.

Our approach is:

• Data-driven and defensible
• Vendor-agnostic
• Focused on governance, not short-term optics

We help organizations:

• Establish transparency across complex IT landscapes
• Identify immediate and structural savings
• Optimize cloud, software, and infrastructure spend
• And implement cost governance models that stand up to board scrutiny

The goal is not cost reduction for its own sake.  The goal is control, confidence, and capacity for growth.

Tony:
Theresa, give our listeners a window into how you approach these IT Cost Management projects—and how quickly you can identify savings.

Theresa:
We start with a collaborative discussion to align  where the spend risk is concentrated—cloud, software, telecom, infrastructure, or a mix. Then we move quickly into data-driven analysis.  We look at spend by supplier by category and focus first on the largest suppliers.      We know exactly what to look for – where billing errors commonly arise and the most fertile sources of optimization opportunities.

1. Performing a forensic inspection of billing data to identify services being charged at prices higher than your contracted rates
   • Collecting and reviewing supplier invoice data
   • Confirming accuracy of billed charges against underlying contracts
   • Calculating value of any potential claims including estimated regulatory fees and surcharges

2. Actively seeking and presenting opportunities for you to optimize use of its network services, such

3. Working with you and your suppliers to recover overbillings and implement optimization opportunities
   • Documenting refund amounts and filing approved claims
   • Responding to questions and negotiating recoveries
   • Providing monthly claims status tracking and reporting

4. We meet regularly with our clients to vet initial findings and agree upon a remediation plan. We document real savings both from a one-time perspective and an annual recurring perspective.  We coordinate with the executive finance team to work in savings into forecasts and budgets.  In our review meetings, IT has a clear view of the amount of savings, when the savings or one-time credits will hit and then can determine how to utilize these savings – either to fund other initiatives or simply to deliver upon required savings.  

Tony:
And what does a typical engagement timeline look like?

Theresa:
It varies based on complexity and data readiness, but at a high level we typically complete findings in 6 – 8 weeks. Remediation can take longer—because it often depends on internal teams and supplier processes—but on average it’s no more than six months to work through the bulk of execution.

Tony:
For CIOs, IT cost management is no longer about defending budgets. It’s about earning trust at the executive table—by demonstrating transparency, control, accountability, and sustainability.

When done well, it becomes a source of credibility—not constraint.

To our listeners, if you would like to discuss IT cost management as a board-level priority or if you’d like to discuss other technology strategy, sourcing and cost reduction needs with Theresa, me, or any of our TC2 and LB3 colleagues, please give us a call or shoot us an email.

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