IT Service Financial Management
Introduction and Objectives
The main objective of IT Service Financial Management is to run the IT services and organisation efficiently and profitably.
As a rule, better quality of service means higher cost, so it is necessary to carefully assess the customer's needs so that the an optimal balance is struck between them.
To achieve this objective Financial Management must:
- Evaluate the real costs associated with delivering services.
- Provide the IT organisation with all the financial information it needs to make decisions and set prices.
- Advise customers on the added value the delivered IT services provide.
- Evaluate the return on investments (ROI) in IT.
- Handle the accounting of the expenses associated with IT services.
The main benefits of proper IT Service Financial Management may be summarised as:
- Reducing costs and increasing the profitability of the service.
- Adjusting, controlling, matching and justifying (if applicable) the prices of the service and increasing customer satisfaction.
- Customers contract services that offer them good value for money.
- The IT organisation can plan its investments better if it knows what the real costs of the IT services are.
- IT services are used more efficiently.
- The IT organisation operates as a business unit and it is possible to clearly assess its overall performance.
Some of the main difficulties when implementing IT Service Financial Management include:
- It is difficult to find people who are familiar with both IT services and finance and accounting.
- There are numerous hidden costs that are difficult to assess due to inadequate financial organisation.
- There is no clear strategy allowing suitably matched budgets to be prepared.
- A rise in costs.
- There is a lack of commitment to the process by the organisation as a whole.