Guest Author: Steve Norton, Solution Consultant, Upland Software
You’re on the edge. Almost there. You are so close to getting started … but you just don’t know how. Don’t worry, getting started is always the hardest part.
Key analysts predict that a typical costs savings of 5% to 10% can be expected from a chargeback program due to the reduced demand and smarter service use. These chargeback/showback programs are one of the key goals of an IT Financial Management (ITFM) implementation. Great, we want the transparency and the savings will easily pay for a solution and other key IT projects, but where do I start, you ask?
There is no one “right” place to start, ITFM is a journey with many starting points and milestones along the way. The key to success is getting internal management and executives on-board and having the right partner to help guide you along the way. Wonderful, but again you ask, where do I start? To get the backing the various CXOs, I need to show benefits right away, or at least soon, not 12 to 18 months out.
So finally, where do you start? Well, the best place to start is the area that causes you the most pain, costs you the most in dollars or resources or missed opportunities or where you think you can get the quickest return. Once you get started you can easily add or expand into the other ITFM service areas along the way. Just like getting on a freeway, there are many onramps, and the starting point will be different for every organization.
Some companies I have dealt with have problems with IT budgeting and simple cost allocation. Getting the annual IT budget set takes months and requires resources from all over the company or world. Having all the various excel spread sheets passed around, rolled up, changed, verified, rolled up again, reviewed, etc., etc., etc. (you get my point) takes significant time away from running IT or delivering new systems to your customers. Then, once the budget is finalized, there is, hopefully, the monthly forecasts that reflect actual IT spend and changes to the budget to reflect what has happened and what should happen. Then given the actual IT spend, you need to allocate those cost out to the various business units/subsidiaries. For these customers, this is their biggest pain and should be the place to start their ITFM journey.
Another consistent theme from other organizations is the need to generate a Bill of IT. It does not matter if it is for showback or chargeback, organizations need to allocate consumption based costs out to the various business units or affiliates every month. These IT departments have basic cost models setup and have vast amounts of consumption data that needs to be categorized, grouped, cleaned, verified, and allocated via complex business rules to the various business units, subsidiaries or partners. For these companies, the process of running the data through the complex data validations, ownership hierarchies, excel spread sheets with sheets and sheets of lookup tables, crosswalk files, financial rollup workflows etc. can take several man-months of effort every month. Solving the error prone and laborious monthly billing process should be the place to start their ITFM journey.
Then there are companies out there who have started down the ITFM path and have home grown systems or processes with cost models, consumption models and basic budgeting abilities. This rudimentary system has whet the appetite of their users and now IT can’t keep up with the transparency demands of the organization. The various CXOs and departmental VPs like what they see and want more. They want more in-depth detail on the costs associated with the various services, they want the TCO for the applications they use. They don’t know it, but what they are asking for is a better service cost model to help them make better business decisions. Unfortunately, IT does not have the staff to build and enhance the internally developed systems or processes. It is time to take the next step and move to a full blown ITFM system developed by a company dedicated to helping them continue on their ITFM journey.
No matter where you are on your ITFM journey or where you wish to go in the near term, you need a partner that can get you there and a partner to help guide you on the journey. When you decide to start your journey, make sure you are working with a company that will help guide and mentor you on an on-going basis, not just sell you software and leave you to do all the work every month. You may have success at first with the help of expensive consultants, but your budget should not have to cover these costs on an on-going or ad-hoc basis. Just remember, eventually you will need all aspects of a full-fledged ITFM solution – Budgeting and Forecasting, Cost Modeling, Bill of IT, Predictive Analytics, Reporting and Dashboards. How you get there is up to you, just find the right partner to work with and guide you on your ITFM journey.
And remember, getting started is the hardest part … the rest is just part of the ITFM journey!