Quick wins enabled via proper IT Financial Management implementation
In this modern day and age, the role of IT in a business environment is (1) critical for success and (2) lamentably undervalued. Not only do a majority of companies still rely on antiquated ways of implementing, budgeting, and utilizing their IT service (say hello to those prevalent excel sheets and legacy business models), even many companies that have found their way into the digital age are still struggling to optimize their IT cost management. Hence, we will regularly offer tips in our blog on how to jumpstart, maintain, and improve your Technology Business Management (TBM).
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 Suitable IT Service Catalogue
This first point seems almost trivial in its simplicity, but 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?
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Proper IT cost management is essential to the successfull expansion of an enterprise. There are many things to consider when it comes to optimizing the underlying processes:
- What does my IT cost?
- Where do the costs come from?
- How do I optimally allocate my IT budget?
Find out how to tackle these questions in our new white paper “10 Steps to Successful IT Cost Management.”
2. Proper Budgeting and Forecasting
It should be the task of the IT controller to properly assess the available budget for all IT undertakings. Once they have identified the scope of the budget, a plan of action can be devised. Which services and products do we prioritize? Where can we make cost cuts? Into which projects do we invest leftover funds? Being able to make projections based on these questions allows for concise, goal-oriented adjustments of budget spending. An additional but no less vital part of this budgeting process should be to evaluate the budget from multiple perspectives. A CFO views budget expenditures 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. Maximizing Transparency
Lack of communication between IT service providers and consumers is one of the main reasons for lackluster IT budgeting. Consequently, everybody benefits if you provide a platform that gives all stakeholders the opportunity to assess all available IT resources. Making the consumer aware of what services and products they deploy, and what costs are allocated where, allows them to adjust their consumption behaviour and make strategic choices on short notice. Moreover, total transparency allows for the identification of pestering expenditure wasters while in turn pointing towards better ways to implement resources.
If you have paid attention 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. In our next entry (before talking about budgeting in detail) we will have a closer look at proper IT cost control.