Cost Assessment SOP¶

Sub-procedure of budget-optimization-sop.md

Overview¶

Detailed procedure for conducting comprehensive IT cost assessments that identify waste, inefficiency, and optimization opportunities across all technology spending categories. This assessment establishes the foundation for cost reduction initiatives.

Scope¶

Parent SOP: Budget Optimization Pillar: Plan (Strategic Advisory) Service Area: Cost Optimization

Prerequisites¶

Parent SOP requirements met (finance and IT leadership commitment)
Access to financial data (AP, GL, credit card statements)
Vendor contracts and invoices available
License and subscription inventories accessible
Cloud provider billing consoles accessible (if applicable)

Procedure¶

Step 1: Spending Inventory Development¶

Compile all IT-related spending from financial systems
Identify and categorize credit card/expense report spending
Document vendor relationships and contracts
Inventory SaaS subscriptions and cloud services
Map spending to cost centers and business units

Step 2: Vendor Contract Analysis¶

Review all active technology vendor contracts
Document contract terms (duration, renewal dates, pricing)
Identify auto-renewal clauses and termination requirements
Assess pricing structures (per user, per unit, flat fee)
Note upcoming renewals within 12 months

Step 3: License Utilization Assessment¶

Gather license entitlement data by product
Collect actual usage data from software admin consoles
Calculate utilization rates by license type
Identify unused or underutilized licenses
Document license compliance risks (over/under licensed)

Step 4: Cloud Spending Analysis¶

Review cloud provider invoices (AWS, Azure, GCP)
Analyze resource utilization and right-sizing opportunities
Identify unused or orphaned resources
Assess reserved instance vs. on-demand usage
Document cost allocation and tagging compliance

Step 5: Waste Identification¶

Identify duplicate tools and overlapping functionality
Document shadow IT spending (unapproved purchases)
Find expired promotional pricing or grandfathered rates
Locate unused subscriptions and services
Calculate total waste by category

Step 6: Benchmark Comparison¶

Gather industry benchmark data for IT spending
Compare spending ratios to peers (IT as % of revenue)
Assess category allocations against benchmarks
Identify outliers (significantly over or under benchmark)
Document benchmark sources and methodology

Step 7: Opportunity Quantification¶

Calculate potential savings by category
Estimate effort and timeline for each opportunity
Assess risk and dependencies for savings realization
Prioritize opportunities by ROI and feasibility
Develop preliminary recommendations

Step 8: Assessment Report¶

Compile findings into comprehensive assessment report
Create visualizations of spending patterns
Document waste and optimization opportunities
Quantify total savings potential
Prepare executive summary for leadership

Deliverables¶

Deliverable	Format	Owner
Cost Assessment Report	Document (15-20 pages)	Lead Consultant
Spending Inventory	Spreadsheet	Analyst
Vendor Contract Summary	Spreadsheet	Analyst
License Utilization Report	Spreadsheet	Analyst
Cloud Cost Analysis	Report/Dashboard	Analyst
Savings Opportunity Matrix	Spreadsheet	Lead Consultant

Quality Gates¶

All spending categories inventoried and categorized
Spending reconciled to financial records
Vendor contracts reviewed and documented
Utilization data collected from authoritative sources
Benchmarks from credible industry sources
Savings estimates conservative and validated
Peer review completed before delivery

Last Updated: February 2026 Parent SOP: budget-optimization-sop.md