“I’m so done with alignment. It’s not even part of the conversation anymore. IT and the business are in this together. Period.”
We couldn’t have said it better ourselves. If you haven’t yet involved the full spectrum of stakeholders – from the CEO, CIO, and CFO to the IT leaders, business unit managers and even to the business partners – in revising behavior and attitude toward technology, now is the time to start. Increasing financial accountability and transparency so the entire organization understands how existing IT investments contribute to business value is imperative to success.
For one thing, many organizations are looking to cut the cost and complexity of delivering IT services by considering cloud alternatives. That requires accurate insight into IT expenses to compare the total cost of ownership of internal services with external providers. Another is that history repeats itself. While the economy seems to be in an upswing, businesses need to be prepared for another recession. They need visibility to understand where they can cut costs or make investments to maintain momentum or drive the business forward.
To do that, organizations need to establish the tools, technology, and processes that support a transparent approach to enable true IT financial management (ITFM). Many organizations have managed IT spending either through general ledger accounting platforms or by using disparate systems to track costs and expenses. A general ledger approach may reveal overall costs but fails to delve deep into the consumption details that comprise the total cost of ownership (TCO) of a given technology solution – a key metric in allocating and managing costs.
An IT financial management solution, on the other hand, provides organizations with a centralized line of sight into their own consumption and both macro and micro level details of actual consumption as well as total cost of technology. By presenting costs as a line item via a monthly invoice, for both internally provided services as well as external solutions, business users can begin to fully understand their technology consumption and its associated costs. They’ll have what they need to justify any cuts or additional spend.
Organizations also experience more productive dialog and organization-wide cost control as a result of increased visibility and accountability. This supports more dynamic forward-facing budgeting, forecasting and planning, enabling business users to make strategic and responsible decisions based on actual data. We see companies that have already started to do this and are reaping benefits from it.
An automated service cost modeling solution is critical for technology financial management processes because it ensures charges are allocated accurately, fairly and in a manner so business users understand what they are paying for. Common examples we hear about are the maintenance and support that go with managing a technology application. Insight into complete IT expenses, presented in business language, enables business managers to better distinguish value-added activities and costs from non-value-added activities and costs. By providing visibility into the costs of technology products and services through an automated approach to IT technology financial management, organizations can strengthen the dialogue between IT and its business partners and positively change the way enterprises use technology.
The quote at the beginning says it all. Business and IT are in this together. Period.
Next best reads for you
- News VMblog: 2023 Predictions for IT Expense Management
- On-demand Webinar How IT Should Adjust for the Next Normal