IT Service Financial Management

Accounts

In principle, the accounting of IT services follows a similar pattern to the accounting associated with other services or departments. However, the complexity of the interrelations in IT makes this process difficult when the people responsible for its accounting do not understand the basic mechanisms and the underlying technology.

It is essential that the accounting process take this complexity into account and does not go into an excessive level of detail that might increase the cost of the process unreasonably.

The accounting activities must allow:

• Correct evaluation of the real costs so as to allow a comparison with those budgeted.
• Business decision-making based on the cost of the services.
• An evaluation of the cost-effectiveness of each of the IT services delivered.
• Billing IT services appropriately (where applicable).

If you want to consider the IT organisation as another business unit it is necessary to have a detailed understanding of their costs and income (although in many cases, the latter are only nominal, as the customer is the organisation itself).

One of the main tasks of Financial Management is identifying the cost items. These may be classified generically as:

• hardware and software costs,
• staff costs,
• overheads,

assigning the proportional part to each customer/service.