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IT cost optimization (ITCO) is a process that appraises the general value of IT architectures and software products in order to support business goals and objectives. Businesses can use ITCO plans to make more efficient use of technology and to make sure that IT resources enhance business processes rather than hinder them.
IT cost optimization may refer to systems that maintain cost transparency or to resources that protect the business from adverse technology impacts in a merger and acquisition (M&A) event. In other words, ITCO can help with planning in case a merger or acquisition requires analysis of IT assets.
Some business professionals may refer to ITCO in the context of return on investment for technology or when trying to figure out difficult issues around value for cost. Aspects of an ITCO plan may include developing efficiencies for technology, looking at the prioritization of IT tools, rightsizing IT resources for business use, pushing for better capacity or performance for technology, and evaluating sustainable growth alternatives. All of these guide businesses toward a more precise use of the IT resources and architectures that they have invested in for the future.