IT Service Financial Management

Practical Case

The "Cater Matters" IT organisation has for several years been providing essential services both for the organisation of the company and for external customers of its catering services.

However, to date, IT spending has not been registered on the accounts and budgeted specifically, and with the data currently available, it is impossible to know what impact IT services have on the cost of each of the catering services provided.

The management of "Cater Matters" wants to develop a pricing policy for IT services that allows it to pass on its costs to end users of the company's catering service, in the same way that it passes on the cost of transport, raw materials, etc.

A senior manager from the IT department and a member of the company's finance department have been appointed to manage this process.

The work plan for the near term includes:

• In collaboration with Configuration Management, drawing up a list of all the CIs involved in providing direct services to customers.
• Evaluate the costs associated with their use, and sharing them out among the different services if necessary, on a pro rata basis: depreciation, maintenance, consumables, etc.
• Evaluating the cost of staff and operating costs.
• Estimating costs associated with IT services that are hidden or difficult to assign.
• Evaluating indirect costs: installations, administrative costs, etc.
• Establishing strict accounting criteria for the administration of IT costs.
• Establishing a cost+margin pricing policy.

All these activities aim to define precisely the costs associated with the IT services already being delivered and to propose rates that can be passed on to customers, either directly or as a part of general items.

However, the objectives of proactiveFinancial Management go further, and include the proper planning of future expenses and investments. For this purpose, in collaboration with Service Level Management, Capacity Management and Availability Management, the following points have been studied:

• Customer requirements and market trends.
• The impact on costs and Service Improvement Programmes (SIP).
• Forecasts and future IT capacity needs.

The information compiled will be used as the basis for the preparation of the first "annual IT budgets" prepared by Financial Management.