Published on April 5th, 20110
IT financial management grows up – Ovum exclusive
Martin Gander of Ovum concludes our preview of the Ovum Knowledge Center at the Service Desk & IT Support Show with a look at how the additional ITIL v3 service strategy processes around IT financial management are key for IT organisations considering new opportunities.
For many IT organisations, the art of finance is pretty much a foreign language, with IT people not really understanding finance – in the same way that finance people often don’t understand HR, or HR people don’t understand marketing. Most IT organisations are able to budget and account for IT expenditure, but how many understand IT service costing – getting “under the skin” of IT services to determine the resources they consume and how cost drivers impact the overall cost of service provision?
A common barrier to effective IT financial management has been the lack of understanding of finance as a discipline within IT, because of both the “language” issue and the lack of comprehension of the “detail” of accounting practices. Beyond this though, there has long been a need for fit-for-purpose technology to enable IT financial management, in order to both support and guide the financial disciplines required within corporate IT organisations. This technology needs to help make IT financial management easier.
IT financial management will be key to cloud migration decision making
Cloud computing is changing the way that IT organisations look at, and will eventually deliver, IT services. However, it is not going to be a total solution for IT service delivery, with most organisations eventually operating a blend of IT services delivered on-premise and via the cloud. Enterprises should apply cloud only to those areas where in-house IT is failing, rather than seeking to apply it (unjustifiably) to areas where in-house IT is already adequate and cost-effective.
In order to figure out which IT assets to keep and manage within a private cloud, which to trust to a traditional IT service provider, and which to source from the various public cloud solutions on offer, IT organisations need to understand what they already have and where they want to go. This is a comprehensive exercise that will need to leverage existing (or quickly assembled) IT service management knowledge and resources.
An IT organisation clearly needs to have a good understanding of the IT services it provides (service portfolio management and service catalog management), along with the service-delivery quality levels required and the service-level agreement targets agreed with the business. One area where many IT organisations will struggle is service costing, and an IT organisation needs to ensure that like is compared with like financially when making decisions around the cloud. It is necessary to understand what service delivery currently costs, that the price paid per month is not likely to be the total cost of ownership (TCO) for cloud-delivered IT services, and that the removal of some on-premise-delivered IT services might adversely affect the cost of those that remain.
Hear Martin Gander of Ovum discuss this topic in greater detail on the first afternoon of this year’s Service Desk and IT Support show. Increasing IT Financial Management Maturity is one of a number of keynotes being delivered in the Ovum Knowledge Center over the two days of the show which takes place at Earls Court, London from 19th – 20th April. To register for free entry go to www.servicedeskshow.com/register