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What’s the difference between IT Financial Management and Technology Business Management?

The answer is, it depends upon who you ask.

According to Forrester, Technology Business Management, or TBM, is an expert stage of maturity where an organization has grown from understanding its IT costs, to managing those costs, and at the highest levels of maturity, to adhering to processes and models to manage and shape the demand of business technologies.

At this high level of maturity that Forrester refers to as TBM, an organization has created a culture of cost accountability.  IT organizations influence user behavior and demand of technologies by charging back costs incurred to the businesses that have consumed the technology.  Activity based costing and fully integrated process models are used to provide and advanced level of chargeback.

Taking a step down the maturity curve, Forrester recognizes IT financial management, or ITFM, as the advanced practice of managing IT costs.  IT organizations are able to provide transparency arounds costs incurred back to the business through basic integrations with financial and operational systems, as well as the company’s ERP solution.  Serviced based costing and service models are the basis for this maturity level as defined by Forrester.

“Better visibility also enables managers to control demand, which has resulted in reduced overall spend.”

Gartner looks at all these stages of maturity as part of the IT financial management umbrella and doesn’t identify the various maturity levels with a particular nomenclature.  Gartner recognizes similar aspects and attributes to the practice of ITFM as Forrester, and through its research, has found that most of its clients prioritize the following ITFM capabilities in their practices:

  • Budgeting
  • Forecasting
  • Variance analysis
  • Cost optimization

So who’s right?

Both of these reputable analyst firms are.  But despite the differences in nomenclature, it really all comes down to what the organization is trying to achieve.  We’ve seen IT organizations that are trying to solve a variety of challenges as they embark on their ITFM journey, regardless of what somebody else calls them.  It may be initial development of a service catalog, providing more informed budgeting and forecasting by having more insights to true costs and demand, all the way to line-item chargeback or optimizing IT investments in support of an entire digital transformation. Or anywhere in between.

It doesn’t really matter what you call it as long as you are getting the service and the solution you need to meet your needs.

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