Firstly, it’s important to clarify that the term “business” refers to ‘front-office revenue generating business units’.
IT Opex cost base increases YoY for various demand and supply reasons. It helps to clearly articulate what % of this increases is demand driven by the business.
In a perfect world, all of the IT cost increase would be business-led but there are many other factors such as inflation, etc that cannot be attributed to business-led demand.
3 categories of business-led cost increases:
1. More demand on End User Computing Services driven by headcount increases, perhaps led by geographic expansion, sales expansion, etc
2. New Product launches to support new revenues (and sometimes, to defend existing revenues)
3. Demand on additional IT infrastructure resources by existing product
It is important to clarify that there may be timing issues related to cost increases. Eg: Capex investment from prior years may likely flow through as depreciation this year, depending on the accounting principles followed by the organisation.