When Finance and Technology Don’t Add Up: Bridging the Cost Transparency Gap

In most organisations, finance teams and technology divisions will give you two very different answers to a simple question: “How much are we spending on IT?”

Finance will pull a ledger extract and provide a number from the ERP. Technology will consult its dashboards, project trackers, and service catalogues, and give you another. More often than not, the two numbers do not match — sometimes by millions.

This misalignment is not a small administrative inconvenience. It creates mistrust, distorts strategic decision-making, and leads to under- or over-investment in critical areas. Worse still, it means the board is often working with incomplete or misleading information when shaping business strategy.

So why does this gap exist, and how can it be closed?

Why the Numbers Rarely Match

The core issue lies in perspective. Finance measures spend according to invoices and accounting codes. Technology measures it according to systems, services, and consumption.

Both are correct within their own frame of reference, but the frames are not the same. That divergence leads to a series of predictable mismatches:

• Finance groups all cloud spend under a single cost centre; Technology allocates by workload or application.

• Finance records a licence renewal invoice; Technology only counts licences actively used.

• Finance books a global network contract; Technology assumes redundant lines are cancelled.

The result is that senior leaders receive competing versions of the “truth” — and strategic decisions suffer as a consequence.

Real-World Examples

Cloud Services (AWS, Azure, GCP)
Finance recorded £4m of cloud hosting costs under a single general ledger code. Technology leaders, monitoring tagged production workloads, reported £2.8m. The £1.2m difference was hidden in untagged development environments, shadow IT initiatives, and long-forgotten reserved instances.

Resolution: A tagging policy was enforced across all environments. Finance and Technology jointly created a monthly cost allocation model, mapping spend to applications and business units. Not only did the numbers finally align, but hidden waste was exposed, resulting in savings of £750k in the first year.

Software Licensing (SAP, Oracle, Microsoft)
Finance tracked £10m in renewals, but IT reported only £7m in active use. The £3m discrepancy was made up of licences purchased years ago that had never been decommissioned.

Resolution: A software asset management (SAM) programme compared licence utilisation logs against active contracts. Surplus licences were terminated or resold, cutting annual spend by 25%.

Network and Telecoms
Finance booked £5m of network costs across carriers. Technology expected £3.5m. The £1.5m difference was traced to legacy MPLS circuits still being billed after office closures and M&A activity.

Resolution: Circuit audits and supplier reconciliations were introduced. Redundant lines were cancelled, generating £1.1m in savings.

Outsourced Managed Services
Finance recorded £15m for outsourced application support. Technology leaders believed it was £11m, as their view only covered service desk and second-line support. The “missing” £4m was buried in embedded resources and project add-ons.

Resolution: A full service catalogue was created and reconciled against financial records. Contracts were renegotiated to ensure transparent itemised billing.

Hardware & End-User Devices
Finance saw £8m in hardware costs. IT’s asset register totalled £6m. The £2m gap was made up of laptops and devices purchased by HR during onboarding, bypassing IT procurement.

Resolution: Procurement was centralised under IT governance. All device purchases now flowed into the asset register, ensuring alignment.

The Cost of Misalignment

These examples are not isolated. Research consistently shows that between 10–20% of technology spend in large organisations cannot be reconciled between Finance and IT.

The consequences are significant:

• Misreporting to the board: Strategic investment cases are built on incomplete or misleading cost baselines.

• Hidden waste: Redundant systems, unused licences, and legacy services continue draining budgets.

• Damaged trust: Finance questions IT’s control of spend; IT questions Finance’s understanding of technology.

• Poor accountability: Without alignment, cost ownership is blurred, and optimisation efforts stall.

In short, the business cannot make effective strategic choices when two of its most critical functions are speaking different financial languages.

How to Fix the Gap

The solution lies not in forcing Finance to adopt IT’s view or vice versa, but in building a shared framework of cost transparency. The most successful organisations tackle this through a combination of methods:

1. Joint Cost Reconciliation
   Establish regular finance–IT reconciliation exercises, tracing every invoice line back to systems and services. This provides a single view of the truth and highlights discrepancies quickly.

2. Chargeback and Showback Models
   Move from lump-sum IT budgets to consumption-based allocation. Linking costs to business units drives accountability and transparency.

3. Service Catalogue Alignment
   Finance and IT jointly define a service catalogue that maps technical services to cost categories. This allows spend to be reported in both business and technology terms.

4. Asset and Licence Validation
   Automate asset management and software licence reconciliation to avoid redundant spend being carried forward each year.

5. Technology Business Management (TBM) and Performance Frameworks
   Adopt a structured methodology, such as TBM or an enhanced framework like Evangelize’s EPF, to bridge finance and technology perspectives.
   

A Framework for the Future

At Evangelize Consulting, we see this challenge repeatedly. Finance has the numbers, IT has the usage, but alignment is missing. Our Evangelize Performance Framework (EPF) was designed precisely to resolve this.

By validating financial data against technology KPIs, we provide clarity on the true unit cost of performance. This enables:

• Clear cost ownership across business units.

• Accurate unit economics for resource and service mapping.

• Business cases built on validated, transparent baselines.
  

Unlike pure reporting tools, EPF is a transformational methodology. It does not just reconcile numbers; it creates the foundation for strategic decision-making, whether the focus is cost optimisation, investment planning, or M&A integration.

The Lesson

When Finance and IT disagree on spend, it is not that one side is wrong. They are simply looking at different realities. The true value comes from reconciling those perspectives and building a unified, transparent foundation for decision-making.

The organisations that succeed are those that stop arguing over “who is right” and instead create the conditions where Finance and Technology are partners in building clarity, efficiency, and strategy.

Because in the end, it is not about whether Finance says £10m and IT says £7m. It is about ensuring the business makes its next move with eyes wide open — on a foundation of shared truth.