In this modern day and age, the role of IT in a business environment is (1) critical for success and (2) still lamentably undervalued. Not only do many companies still rely on antiquated ways of implementing, budgeting, and utilizing their IT services (say hello to those Excel sheets and legacy business models), even some of the companies that have found their way into the digital age are still struggling to optimize their IT cost management. If you find yourself in this situation, implementing comprehensive IT financial management principles might be a remedy for your business.
First, we will start at a very basic question: why would you even want to implement IT financial management? While there are many benefits and facets to talk about, today we will focus on three quick wins that will immediately demonstrate the benefits of proper IT financial management when it comes to cost control and budgeting.
1. A Comprehensive IT Service Catalog
Providing a coherent and comprehensive catalogue of your IT services and products goes a long way in improving your IT cost management. First of all, you will gain a more holistic overview over your IT capabilities. Furthermore, you can offer that same intel to the consumers of your services. Crucial information to include in a fleshed-out service catalogue are things like: what services and products are offered? At what cost? In which situations, departments, and/or functions can we deploy them? And (most importantly) what value can they help generate? Once you know what your IT is even capable of and what your enterprise gains from it, you will have an easier time leveraging these resources optimally.
2. Sophisticated Budgeting and Forecasting
Proper assessment of the IT budget is one of the most vital jobs of an IT controller. Once they have identified the scope of the budget, a plan of action for the next fiscal period can be made. Which services and products do we prioritize? Where can we make cost cuts? Into which projects do we invest leftover resources? Being able to make projections based on these questions allows for concise, goal-oriented adjustments of the budget spend. An additional but no less vital part of this budgeting process should be the evaluation of the budget from multiple perspectives. A CFO views budget expenditure in different terms than, for example, an IT Director. Therefore, being able to translate between assets, technology, and business services—e.g. how do hardware expenses translate into certain end-user devices and how do those translate to specific value creating services or products?—will facilitate the communication between stakeholders and ultimately improve your budgeting process.
3. Optimize Transparency
A lack of communication between IT service providers and consumers is one of the main reasons for lackluster IT budgeting. IT services are often provided in bulk and at a flat fee without any sensitivity for what is actually needed and useful. However, if you provide a platform that gives all stakeholders the opportunity to assess all available IT resources, everybody benefits. Making the consumer aware of what services and products they deploy, and what costs are allocated where, enables them to adjust their consumption behavior and make strategic choices on short notice. Moreover, the right level of transparency allows for the identification of pestering expenditure wasters while in turn pointing towards better ways to implement resources.
You will have noticed that all three of these points aim at more or less the same crux of the matter: you want to have a holistic analysis of your IT costs and budget, where every participating party knows which resources land where and why. Once these requirements are met, the budget can be more effectively monitored and planned.
Achieving these quick wins can be easy if you implement a specialized software tool for financial management. Serviceware Financial offers various functionalities to digitize, automate, and streamline all processes of financial management for IT and Shared Services. Find out about all of its features in our free white paper.