Information technology (IT) costs

Information technology (IT) costs are the money an organization spends to buy, run and change its technology, including hardware, software licenses, cloud services, networks, staff, contractors and support contracts. They are usually split into the cost of running existing systems and the cost of changing them through projects, and into capital and operating expenses.

IT financial management tracks these costs and assigns them to the services and business units that use them, through showback or chargeback, so that leaders can see what each application or service costs to own. Cloud services have made more of the spending variable, so many teams manage cloud costs with FinOps practices: tagging resources, reviewing usage and adjusting capacity regularly.

Software decisions affect IT costs for years after they are made. Hosting, licensing, maintenance, monitoring and the engineering time needed to keep a system current can add up to more than the cost of building it, so total cost of ownership is a better basis for comparing options than the purchase or build price alone.