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Journal2012Win_9 Takacs, Comsci

ITFMA Journal

Software Alone Will Not Solve Your IT Finance Problems:
The Solution to Best-practice IT Financial Management

by Louis Takacs, CIO of Product Development at ComSci


Managing the business of technology is becoming increasingly important. It requires that today, more than any time in history, organizations align IT with all enterprise objectives. Companies can do this, but must first better understand technology/IT investments, utilization, and value to the business. Every industry is in the technology business today and IT represents a greater percentage of overall corporate spending, propelling IT financial management (ITFM) to the top of the organizational management priority list.

Today’s CIOs are challenged to reduce costs for running the business while at the same time fund technology innovation for competitive advantage. Getting a handle on IT investments is critical, not only to meet these corporate objectives, but also for making more fully informed decisions to optimize technology delivery.

IT financial and business management solutions play a key role in today’s best-practices approach to managing the expenses and consumption of IT products and services. However, not all technology solutions are created equal. Simply purchasing technology business management software does not bring the rigor and discipline needed for measuring IT as it relates to business outcomes.

Just as few people would tackle a whole-house plumbing project without a plumber – and even fewer would attempt surgery without a surgeon – most organizations need additional systems knowledge, industry insight and awareness of best-practices to realize the full value of a technology solution and reach their business goals. Nowhere is this clearer than when it comes to IT financial and business management processes and methodologies.

Just as few people would tackle a whole-house plumbing project without a plumber – and even fewer would attempt surgery without a surgeon – most organizations need additional systems knowledge, industry insight and awareness of best-practices to realize the full value of a technology solution and reach their business goals. Nowhere is this clearer than when it comes to IT financial and business management processes and methodologies.

Manual Excel-based, non-dedicated IT finance or business management software falls short even when well-managed because these tools do not provide adequate detailed insights into today’s costs of IT products and services or how they are being consumed. At best, they provide a sub-segment or high level "summary” view that is not sustainable, repeatable or fully adequate to communicate the complete value of a given technology, i.e. IT product or service. However, specialized ITFM software, combined with ITFM business-process-as-a-service (BPaaS) delivers a complete and accurate view of existing IT products and services and their total associated costs on at least a monthly basis. This enables organizations to communicate the value of all technology utilization, optimize IT investments, readily track consumption trends and ensure that consumption aligns with business strategy. Only when combined with IT financial business process services, including experienced counsel and best practices for dynamically managing the data-intensive operational work for enhanced accuracy and continuous improvement, can organizations gain the full advantages of today’s focused ITFM software applications.

It Comes Down to Service

There are distinct differences between a software application and a technology solution. Software applications or programs direct the operation of a computer. While software is intended to solve problems, it is only part of the complete solution. A true solution, on the other hand, takes into account all business variables and objectives to solve a problem. A complete solution, by definition, adds value to the enterprise.

Today’s Software-as-a-Service application "instances” for IT financial and business management can help bring financial discipline to the business of IT. But software applications, whether on-premise or via SaaS delivery, often end up as "shelfware,” especially when it’s not intuitive, or worse, fails to deliver its intended value. This also occurs when the application is cross-functional. Getting the most from an ITFM ‘solution’ comes down to this: Service.

A combination of accurate data, expertise, support services, best-practices and all required resources is the only way to ensure that ITFM software applications perform as intended, providing accurate visibility into the costs of IT products and services and its consumption. As organizations bring greater financial discipline and business acumen to IT, here are key questions to ask when evaluating complete ITFM solutions:

What type of expertise is required?

ITFM solutions are data-intensive and rely on disparate systems of record from enterprise IT. Successful ITFM solutions require locating, coordinating, continuously verifying and validating this data. To be successful and ensure that accurate data is correctly entered into the ITFM application, IT organizations must ensure they have, among additional in-house resources, technology finance and business analysts on hand when deploying ITFM software.

Beyond the additional investment in salaries, benefits, training, and more, these roles require a highly specialized IT financial management skill set. If this talent walks out the door, so does the organization’s IT finance and business management expertise.

An ITFM solution provider should possess all the required technical knowledge and IT finance domain expertise, thereby enabling organizations to achieve the best results from their ITFM software application without these internal staffing issues. A complete ITFM ‘solution’ is one that is offered in conjunction with the necessary ITFM business process services that can serve as an extension of the corporate IT finance organization, alleviating the need for additional internal human resource investments.

What extra services are required to support a successful ITFM solution?

It is important to understand what is –and is not– included as part of a complete IT finance and business management solution, especially as business needs change. It is imperative to identify how all ITFM processes are managed and to clearly define who owns these responsibilities.

From the start, organizations need to inquire how vendors manage change, large and small, and how that impacts the service or cost for ITFM software applications. For example, should systems of record and their formats or adapters change, what additional charges are required to accommodate these business variances, or are they included as part of the ITFM solution service agreement?

When looking at ITFM software applications, additional areas for consideration are:

  • Who are the key stakeholders from the IT team who are responsible for managing and ensuring receipt of the disparate source files?
  • Can the generated IT sub-ledger file be uploaded automatically, free of errors, into the corporate financial system or is that onus on the IT or corporate finance team in a manual, labor-intensive process?
  • Are the key metrics for managing assets, capacities, service level agreements and the like readily available – and more importantly, accurately delivered by IT’s suppliers and vendors?

The right ITFM solutions partner guarantees a high level of continuous service and is committed to the CIO and IT team’s financial and operational success and should address these requirements as part of an ongoing engagement.

Where are the checks and balances?

As mentioned earlier, ITFM is data-intensive, requiring continual data quality checks and controls to ensure accuracy of data source files and outputs. All IT financial and business management solutions require repeatable processing of IT systems of record, requiring trained IT or corporate finance staff to operate and maintain. If the IT organization doesn’t have appropriate internal expertise and resources to manage this key process, they will not achieve accurate or sustainable IT financial transparency. When partnering with an ITFM solution provider this "continuous operation” should be included with the overall ITFM solution. As such, this solution extension to the enterprise provides that "extra set of resources” to ensure the utmost of accuracy is consistently and sustainably presented within the ITFM solution.

A complete ITFM solution provider regularly reviews information for variance checks in a process tied to the monthly corporate financial production cycles. When new variables such as acquisition activity, decline in business or use of a particular technology arise, those events are accommodated for, accurately reported and appropriately managed.

What is included in the cost?

Similar to car shopping, organizations need to "look under the hood” and investigate what is considered standard and what is extra from an ITFM vendor to accurately budget and understand the value they are getting with an ITFM solution. These are the questions to ask:

  • Are software upgrades included or charged incrementally?
  • Are there additional costs for professional services?
  • Are business process services included – or is that an extra fee?
  • If the corporate systems of record that form the ITFM data repository changes, are there additional fees or is this a one-time investment?

An ITFM solutions partner that serves as an extension of the IT team will help mitigate and manage change without additional fees. Operating with the company’s best interest in mind, the right partner should be committed to providing support to deliver the most advantageous and successful ITFM solution.

For software offerings that require additional investment to manage change, upgrades, etc., organizations need to ensure they understand these additional fees and budget for the additional costs. Conversely, a solutions provider that offers the ITFM software applications combined with business process services at a level of predictability can support more accurate budgeting for the complete solution.

Aligning Technology Investments with Business Priorities

IT financial and business management solutions are increasingly important as organizations align technology investments with business priorities. The right ITFM solution will provide increased financial transparency for technology investments and consumption based on accurate data in a consistent manner to the corporate reporting cycles.

However, the right ITFM business partner does more than that – they add value to the enterprise by systemically solving the very real challenge of IT cost and consumption transparency. They do this not merely with software, but with IT financial management best-practices, processes, methodologies, expertise and intimate domain-knowledge that is transparent and visible across the entire corporate structure.


Louis Takacs is CIO/vice president of Product Development at ComSci, a leading provider of Technology Financial Management (TFM) solutions for IT Cost Transparency and Demand Management. ComSci is headquartered in Iselin, New Jersey, and was founded in 1971. ComSci clients include companies such as The Bank of New York Mellon, NYU Langone Medical Center, 1-800-FLOWERS.COM, Memorial Sloan-Kettering Cancer Center, SAP, and UBS Investment Bank. For more information, visit www.comsci.com.

 

Copyright © 2012 by the IT Financial Management Association.

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