Review: Enabling IT FInancial Transparency

The purpose of this presentation is to illustrate how to calculate IT costs in a scientific way and not guessing. IT financial management is one of the most complicated subjects to address.  From a business perspective IT financial transparency is usually a pain.

The start of the presentation was a bit boring and I was about to quit. However it became more interesting and I moved forward.

The presentation introduces the importance of understanding the Business Blueprint for IT which is built from the Service Catalog (both Business and Technical ) and the understanding of the Value Network. Once you’ve the Business Blueprint for IT you can add a financial layer by assigning  the cost related with each item/component in the Blueprint.

Compiling the Business Blueprint for IT helps to give insights regard the following in one model:

  1. Budgeting
  2. Development
  3. Delivery
  4. Recharging
  5. Quality

However, the subject is still not easy and it should be very well investigated, especially when it comes to calculate the costs which should include:

  1. Overhead costs: rent, administration, HR, electricity….etc
  2. Asset costs: servers, routers, machines, equipments…etc
  3. Project costs: Project management cost, projects implementation…etc
  4. Labor costs: salaries, per diem, overtime…etc

The presentation also discussed how to automate the process of collecting the information and how to report and present them.

The last slide was a very good conclusion as it summarized it all in a step-by-step approach:

  1. Identify infrastructure costs from a service perspective
  2. Measure the cost of managing and transforming IT by centralizing and automating resource management and time reporting
  3. Identify cost-drivers and allocate the cost of all services you delivery fairly
  4. Define the business value of services and provide business units with understandable options, such as gold, on-site support, high performance 24/7
  5. Compare costs and business values to identify value adding activities
  6. Determine what services to operate and what services to buy

Finally, one of the reasons why I liked this presentation is that what I do to enable IT financial transparency and it matches the process suggested by an ITSM veteran and Principal Consultant at CA.

Click here to view the presentation

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