If you attended the show, you know the event was abuzz with the latest innovations around automation of manual IT finance processes and taking a best-practices approach to IT finance and business management. If you couldn’t attend, we’re excited to share highlights from the five-day event:

Increased  Market Awareness – Overall, the sentiment is that there needs to be greater focus on IT financial transparency– and that new focused technology can bring greater control and visibility to IT finance and business management. Attendees were able to view a live demo of the ComSci solution and learn how it automates the terabytes and petabytes of data that have to be processed for true transactional data layer and for the data repository to be defined.

IT Leaders Want Ability to Control Multiple Budgets – Attendees revealed the challenges with working with budgets in silos across IT and using manual processes to aggregate IT’s financial and performance information together. In addition to discussing the shortcomings with Excel-based processes that are prone to error and static information, attendees learned how today’s automated ITFBM solutions can dramatically improve budgeting, planning and forecasting processes, as well as cost modeling and showback/chargeback processes.

It Takes a Village – Beyond lectures, workshops and practitioner presentations, IT finance professionals were able to network, share ideas and engage in peer-to-peer discussions to learn how IT industry leaders are increasing discipline around IT finance and business management. Community-building was strong at the show, where attendees could network with peers and their families could enjoy San Francisco’s spectacular amenities and extracurricular activities.

The Great Debate was ….Great – One of the most popular and well-attended sessions was a presidential-style debate where IT financial management thought leaders went head-to-head and discussed topics such as build versus buy, chargeback versus showback versus allocation, and tools versus processes. With time limits on responses and active audience participation, this “must attend” session had fever-pitch excitement and addressed a wide range of today’s IT financial and business management issues.

In addition to regular conference sessions, IT finance professionals wanting more depth were able to attend a number of three-hour pre-conference workshops on topics such as Calculating the True Cost of IT Services. Attendees gained practical hands-on information such as best-practices for cost modeling and why it is better to be approximately right rather than precisely wrong. The workshops also gave participants additional opportunity to network with other senior level IT finance peers and participate in collective sharing of knowledge for ITFM best-practices.

As the next several years will bring great change to IT organizations with wider adoption of cloud services, IT teams will need to be prepared to broker IT services internally versus externally and use newly focused technology applications and tools to make more informed decisions and gain insight into total cost of ownership. The conference proved valuable in preparing IT finance leaders to think differently about IT finance and business management and advance their own organization’s discipline around the delivery of technology.

ComSci will be participating in the ITFMA’s 2012 summer conference to be held in August. If you’re looking to advance the practice of IT financial management at your organization and learn more about ComSci’s award-winning Software-as-a-Service and Business Process-as-a-Service IT finance and business management solutions, consider joining your colleagues and ComSci at the next ITFMA event!

It may be instinctive to immediately think of Service Level Agreements (SLAs) when it comes to service and cloud-based enterprise software solutions. However, when your company is making an investment in IT financial and business management solutions, the service aspect of the relationship should go beyond uptime and availability. The best outcome results from a relationship where your expert advisor is just that: a true IT financial and business management (ITFBM) counselor to your entire enterprise.

As organizations mature and automate their IT management processes, the right set of software solutions is critical. A focused set of ITFBM solutions will increase accuracy and visibility into the total cost of ownership (TCO) of IT products and services, promote more responsible technology consumption behavior and enable accurate budgeting and forecasting to current and future business requirements. These are the components needed to ensure that technology investments, like Cloud Computing, align with your corporate business priorities.

When selecting Software-as-a-Service-delivered (SaaS) ITFBM solutions, the service provided is more than just delivery of the applications. ITFBM expertise services month over month through every production cycle has to be a critical component of the strategic plan to ensure your organization gets the best ROI, performance and value from ITFBM automation.

Go Beyond the Service Level Agreement (SLA). It is important to know how responsive your ITFBM vendor will be when issues arise, but it’s equally important to take a more global view of the relationship. The right partner will offer IT management expertise beyond any software application capabilities. Business needs shift, so you have to make sure your partner is there for the long haul; and can help you adapt the automated IT management solutions when business requirements change or offer better alternatives to achieve the strategic end goals.

Guidance is golden. You can give someone a scalpel, but even the best tool or technology will not make him or her qualified to be a surgeon. Surgery skills require years of knowledge-gathering, expertise, and training. The same holds true when investing in technology. Without the right expertise, it is impossible to realize full value from any technology solution. An ITFBM partner with depth and breadth of experience across a diverse client portfolio will be able to offer benchmarks, best-practices and insight to ensure the solution returns the right results. Lessons learned transcend individual experience, enabling companies to take advantage of the partner’s wide-range of perspectives to understand what has worked in similar situations.

Do more with your data. Data is the foundation of better technology business decisions, but without a commitment to analytics, collecting IT cost and utilization data is meaningless. An experienced ITFBM partner can look at processing of data and delivery of information to seek out better and more efficient methods of delivering strategic technology utilization information to both the IT team and technology consumers. This can include improvements to the user interface platform or mechanisms behind the scenes for transactional data transformation and to improve communication of key summary information.

Don’t fall in love on the first date. A great sales process may be an invigorating component of a new relationship, but it is the implementation and account teams that handle the ongoing client/vendor relationship. For example, a proactive account management team will have regular meetings and monitoring of checkpoints that allow the account manager to catch issues before they affect the clients  and become major events. A true IT management partner committed to your success can answer key questions such as:

• How should you optimize the governance processes around the IT financial and business management automation?
• How should you apply automated ITFBM processes to your technology consumer base and what are the right technology performance and demand management metrics to measure and report to each key stakeholder in the technology value chain?

With an eye toward iterative operational and implementation efficiencies, the right partner will enable continual improvement of your automated IT management processes

We agree with Bessemer Venture Partners: The most important part of Software-as-a-Service isn’t software – it is service. How is your IT financial and business management provider committed to your success now and in the future?

There was also the problem of connecting disparate systems, which required integrations and APIs that were difficult to deploy and faulty at best. Hence the practice of allocations based on headcount for any and all IT expenses. ‘Chargeback’ was heralded as the best practice process that could change ‘peanut-butter spread’ allocations. The trouble was IT teams had to build the ‘chargeback’ system themselves.

Advancements in technology, including greater processor speeds, storage capacity at really inexpensive prices and the ability to have all the connectors to aggregate all of the information needed on consumption and utilization data have paved the way for a better chargeback process. Rather than a concept preceded by a litany of four letter words, today’s chargeback solutions are a different four-letter word: gift.

A SaaS-based technology financial management solution is the gift that keeps on giving because it provides organizations with a centralized line of sight into their own consumption, and both macro and micro level details of actual consumption, as well as total costs of all technologies deployed across the enterprise. This supports an accurate chargeback process that helps users understand the full cost of technology solutions and the value they deliver.

Chargeback done right offers business benefits to both the IT organization and corporate technology users. Because it provides a great degree of accuracy and a centralized line of sight, chargeback today supports more-informed analysis and decision-making. A significant additional benefit is that the entire IT budget, from both the IT team ‘supplier’ side and the business unit ‘consumer’ side of the IT value chain, can be agile and automated.-

Chargeback is also essential as more organizations opt for cloud computing solutions. Third-party solution providers excel at articulating their costs, making it necessary for internal IT organizations to communicate to their corporate business colleagues in the same manner. An IT technology financial management solution and effective chargeback model give organizations the agility and insight to weigh the value of technology resources and savings from cloud alternatives with information that supports keeping critical systems in-house.  There is even the third choice that can be evaluated, and that is selecting to go with a hybrid technology solution.

An effective chargeback process  gives the gift of corporate technology cost transparency, which is no longer a luxury, but a business necessity. With greater emphasis on the relationship between technology and business success, a chargeback solution can contribute to openness around costs with the IT organization. As a result, it encourages more responsible technology consumption and communication around business priorities from a financial viewpoint.

In an economy rife with uncertainty, organizations need to be nimble and adjust costs as business conditions change. Chargeback enables organizations to make the connection between the costs and value of IT products and services.

There’s no doubt that chargeback has evolved from a four-letter word to a mission-critical tool. With an effective technology chargeback system in place, organizations have the flexibility to meet the needs of the business, deliver optimal technology solutions and achieve the corporate business goals.

IT financial transparency will become more important than ever. IT organizations will face additional pressure to provide business users with information that enables them to make informed technology decisions. However, they’ll need to move away from presenting financials in traditional categories such as hardware and software.  IT organizations will also need to go beyond just knowing what services they offer – they will need to understand the true cost to deliver each of the services and the cost variability associated with each of the services. The ability to provide business management with the necessary metrics and levers to truly impact cost in relationship to the services they receive will be an important indicator on the success of CIOs in 2012. Business management wants to make informed decisions – CIOs must be able to provide them with the metrics and reporting to make such informed decisions.

IT financial transparency is a means toward value demonstration. Although IT financial transparency is a major step in providing business management with key decision making information, it is just a means toward an end – i.e., providing business management with insights into the value of IT. Some important questions the business needs to be able to effectively answer are what levers can I pull to lower cost without impacting performance? What is the most cost effective level of service to meet business needs? Is my current spend and consumption consistent with my business strategy?  By providing the business with insights into the value of the services delivered by IT, the discussions change from “cut your IT budget” to “where do we need to invest in innovation to grow our business and outperform the competition?”

More cloud-based services will require exploring true total cost of ownership (TCO). The days of owning software are changing, especially as the cloud goes from nascent to emerging to mainstream. Industry researchers predict that Software-as-a-Service (SaaS) will account for some 15 percent of enterprise application purchases by 2015, up from 10 percent today. As cloud technology continues to expand, IT organizations will need to be able to better articulate the cost variability around the internally provided services they deliver to the business. Moving services to the cloud without understanding the impact to a heavily fixed cost infrastructure could result in a significant increase in IT costs. Understanding cost variability and the true financial impact of moving to the cloud will be critical to the financial success of the enterprise.

Because of the cost variability of cloud computing services (i.e., based on consumption), it’s also critical to understand how these services are being consumed by individual business units.  As organizations migrate to cloud-based solutions they need to understand the consequences of consumption to effectively control costs, measure cost savings, uncover additional savings opportunities, and gain the expected financial efficiencies.

An influx of personal IT will bring more management challenges. 2011 saw an explosion in the number and types of devices and applications business users are using. Moving forward, this will create new challenges for the CIO, especially because business users aren’t just using company-issued laptops or mobile phones; they’re expecting the organization to allow them to bring their own technology – whether that’s an iPad or smartphone device – and support it and ensure it’s secure.

With the consumerization of IT, forward-thinking organizations need a proactive solution for managing and supporting personal technology while at the same time reducing, controlling or redirecting the company’s mobile spend. Getting accurate, real-time data into the drivers behind mobile costs will be paramount and can help organizations analyze usage patterns, take advantage of economies of scale when standardizing on a device, or manage the vast amount of available rate plans.

Scrutinizing the value of IT, demanding more for less and pressuring IT for enhanced mobility and cloud-based services will continue to challenge CIOs in 2012. Are you prepared to provide the insights into the value your IT organization brings to the business and to your firm?

In this era of global belt tightening where every dollar, yen and euro counts, it’s crucial to have complete insight and data to support all technology deployment decisions: storing information in ‘silos’ should be a remnant of a past era for IT management. Forward-thinking companies and their leaders are turning to fully automated technology financial management (TFM) solutions to eliminate key data ‘siloing’, uncover hidden costs, and identify cost optimizing opportunities while effectively communicating the value of IT to the entire organization.

For the first time, organizations can have the ability to centrally aggregate massive amounts of accurate, dynamic technology cost and consumption data. This capability is critical for larger organizations, especially as enabling technologies have leveled the playing field for smaller companies, allowing them to compete globally with even the largest corporations in unprecedented ways. A best practices approach by the entire IT leadership team toward TFM makes it possible to optimize the cost and value of all IT products and services, ensuring that the IT organization’s priorities are in complete alignment with corporate business goals.

TFM capabilities can:

*Deliver accurate insight into the total cost of ownership (TCO) for applications, assets, infrastructure and manpower using a consolidated end-to-end technology financial management platform

*Identify redundancies in technologies, applications and services, making sure organizations do not keep or add unnecessary costs to its existing technology deployments and IT spending

*Enable taking full advantage of cloud services that augment and enhance internal technology delivery mechanisms at optimized costs

*Ensure service level agreements (SLAs), software licenses and vendor agreements are up-to-date, accurate and aligned with business requirements

*Pinpoint opportunities for IT product and service consolidation or rationalize redundancies based on business goals

*Provide proper governance for managing the organization’s technology infrastructure and operations

*Benchmark IT expenditures against other companies and industry-based peers

Technology is one of the largest expenditure for many organizations. A TFM solution brings discipline to how IT is delivered and ensures that current and future technology investments support business priorities. Unless you can afford to leave money on the table, don’t make another technology investment without taking a best practice approach to technology financial management.

In most organizations, technology is either perceived as very expensive or free, depending on how costs are communicated from the IT organization through the business. Companies that rely on an allocation process that evenly distributes expenses between departments contribute to that perception. Why? It is because LOB managers cannot get accurate insight into their technology spend – which is vital when it comes to making technology decisions and forecasting expenses.

Business managers who don’t have accurate insight into technology expenses are hindered in their ability to change, control or manage their technology consumption. For example, a business unit manager may note a monthly charge for $180,000 for IT. However, without detailed insight into what comprises that cost, how can they determine what should be charged back to their department? Or, how can they determine how to budget resources to support business priorities? And, if additional services are required, do they have insight into the incremental expense?

Holding business managers accountable for their technology costs and consumption is a critical component of a successful IT financial management strategy. Another is providing visibility into what comprises the total cost of IT products and services. As more business unit managers are targeted by third-party infrastructure and Software-as-a-Service (SaaS) providers, it is crucial that they understand the total cost of IT products and services – both those provided internally and externally – and the value derived from them. Having insight into their actual usage via a monthly invoice increases accountability and enables business unit managers to prioritize decisions, make strategic spending decisions, and become responsible corporate citizens.

By providing business managers with actionable data via a monthly statement of their IT expenses, they can enhance their strategic pricing decisions about the services they provide to their external customers (pricing for check processing fees, online reservations, ATM fees, etc.). They can also better distinguish value-added activities and costs from non-value-added activities and costs.

With a financial management solution in place, business managers gain access to the appropriate level of details that enable them to make informed decisions, accurately price new offerings, and remain competitive in the market.

The rigor of IT chargeback, when done right, can provide a level of transparency previously unobtainable for many organizations. When chargeback is communicated properly, it can bring transformative business change. Users better understand what they are expending and the associated costs, becoming more thoughtful consumers and ensuring IT investments support strategic goals.

The topic of IT chargeback has been controversial at many organizations, but is it evil? Well, that depends on who you ask:

IT Organization:  The allocation method fails to provide a true measure of consumption and if organizations are creating these allocations based on incomplete or inaccurate data, it can produce false transparency, giving chargeback a bad rap.

To move from an allocation process to a true measure of consumption, organizations should take a phased approach to IT chargeback and provide users with a showback or “mock” invoice that illustrates consumption and product rates. IT should start with a summary level based on higher level assumptive data and metrics and refine it as they gather appropriate data sources as the process evolves. One caveat: some business units will be overcharged in the beginning while others are undercharged. IT needs to communicate that accuracy will evolve as the process matures.

Business Users:  When there’s perception that IT is free or that IT chargeback is incomplete or done incorrectly, business users understand they are not being fairly charged for IT consumption. As a result, they don’t see the value in the IT chargeback process.

When the system is built on accurate information, and business users can verify what they know to be true, it can evolve the partnership with the IT organization and create greater value from the chargeback process.

CIO/CFO:  Leaders need to answer the question, “Why is IT so expensive?” By implementing an IT transparency and chargeback solution they can provide metrics to answer the questions they’re being asked. For example, they can demonstrate that unit costs are being reduced but the number of users is increasing. By supporting and sponsoring a mature IT transparency and chargeback solution, leaders can ensure managers are in control of their budgets and that chargeback strategies are accurate and fair.

Increased transparency supported by accurate data is crucial for all stakeholders. IT chargeback isn’t evil; but businesses won’t derive the benefits of true transparency if it isn’t done right. By providing accurate insight into cost drivers and actual consumption, organizations can influence behavioral changes, adding value to the business.

From an organizational perspective, the archaic percentage allocation accounting method doesn’t provide a true view of consumption or the ability to forecast future demand. Just because a unit doesn’t use a particular product or service today, or uses it in limited quantity, it may not stay that way over time. Without total cost insight and accurate usage data combined to produce a technology bill of materials or consumption invoice, organizations cannot effectively budget, influence technology demand behavior, communicate technology value or accurately plan for future investments.

Today’s corporate IT under-consumer may be tomorrow’s power user or the key catalyst to significant business growth. An accurate chargeback process is essential for optimizing IT costs and ensuring strategic corporate initiatives can be supported. A technology financial management solution offers a data-driven approach that ensures enterprises have an eye on current needs as well as future demand. Rather than charging under-consumers for IT products and services they’re not using, providing greater transparency into costs enables business units to make more accurate, better informed decisions that support business priorities and growth goals.

Activity-based costing (ABC) has been discussed in recent years, but is only now becoming universally pervasive in IT accounting practices. The reason is actually quite simple:  ABC provides a best practice approach that makes it easier to account for indirect as well as direct costs. Couple ABC with traditional percentage allocation, and a highly accurate ‘hybrid’ cost modeling structure can be incorporated in your IT financial management strategy. This helps IT organizations get an accurate accounting on total actual expenses and ensures business consumers are charged fairly. It’s important to use accurate cost information to derive technology unit rates, thereby avoiding the pitfalls of false transparency. Then, technology consumers can make informed, cost-conscious decisions that add the most value to the business.

Implementing an accurate, hybrid cost modeling with a consumption invoicing showback/chargeback process also enables equitable comparison between internal and external IT sources and supports open communication around the value of technology to meet true business objectives. Then, the CIO and his or her team can optimize both the cost and delivery mechanisms of technology in their corporate environment. Cloud computing may be an attractive option, but organizations need to fully understand, and be able to articulate, the total costs of all IT products and services that are provided internally to compare the value of each externally provided technology solution. Gaining this total cost (TCO) insight results in an equal playing field where organizations can understand true costs based on demand and consumption.

Avoid giving under-consumers the short end of the stick e.g., charging them for technology they aren’t using. Instead, increase cost and consumption transparency that drive data-driven decisions through a mature chargeback process. By accurately defining rates and demand, all technology consumers can make responsible IT decisions that drive profitability and performance.

According to Gartner Research, IT spending is expected to increase due to the adoption of tablets, smartphones, their applications and support services. While the proliferation of smartphones may offer a boon to productivity, it also creates new IT management challenges, particularly as more organizations allow or support personal mobile devices. Part of an organization’s smartphone strategy includes choosing appropriate communication technology and service plans, then managing the plethora of available rate plans, devices, and actual usage – all of which becomes increasingly complex and inaccurate with manual or disparate processes.

As more employees are armed with Androids, iPhones, iPads and BlackBerry devices, organizations need to be proactive in managing the costs of wireless communication to avoid overspending. Taking a disciplined approach to IT financial management can help organizations reduce or redirect their mobile spend.

An IT financial management solution provides a consolidated platform with visibility into data, enabling IT organizations to easily and clearly view employee level activity in an effort to better  understand actual costs, usage and patterns. With this insight, they can then control costs or change consumption behavior.

For example, providing business unit managers a normalized monthly invoice across vendors which identifies the business units’ wireless consumption enables them to review statements for accuracy, ensure they are paying for technology they are actually using and most importantly, help the organization control costs. They can gain insight into actual usage of voice plans, data plans or add-ons and have visibility into what is not being used or used in excess of contract agreements. 

Increased IT cost transparency in and of itself can contribute to more responsible behavior and reduced costs. An example of this is a global software organization spending $USmillions on its wireless communication that made no changes in demand or spending – they simply provided a CIO Invoice to all employees with a company owned wireless device which would allow the employee to view their consumption. Providing that invoice at the employee level increased their awareness of service levels and how they were using their mobile devices which in turn, drove a change in behavior and allowed the organization to reduce mobile costs within a few short weeks.

Being able to view mobile investments holistically across the organization also delivers insight into the most cost effective mobile devices and enables companies to take advantage of economies of scale. Without increasing transparency into costs and usage and IT expenditures, how can your organization know if it’s spending more than it should for mobility?

Increasingly, the C-level, senior executives, and boards are demanding that their corporate IT teams deliver not only more services, but also with greater efficiency and cost optimization. In a business sector already full of buzzwords, talk of “cost transparency” and “cost optimization initiatives” rules the day.

With technology advances accelerating at an ever-increasing pace, CIOs and their teams will weigh benefits and investments of internal and external technology delivery mechanisms for optimizing the delivery of technology to meet corporate business objectives with complete cost transparency.

Understanding these concepts – or even taking tentative steps to implement them – is one thing. Doing it with a laser-like focus on best practices is something else altogether.

What do those cost optimization and cost transparency best practices look like? Key elements should include:

• Formal, documented change management processes for IT financial management
• Developing a published rate card for all IT products and services and communicated to all internal business-unit management
• Ongoing communication of chargeback policies to organization, executed against a formal communications plan
• Provide an accurate mock ‘showback’ invoice to business unit managers during the transition to complete technology cost transparency. Establish rates for a pre-determined period of time such as a fiscal year, rather than fluctuating monthly
• Use enabling technology that can standardize the IT cost transparency process across the organization, rather than home-grown solutions like Excel spreadsheets and Access databases.

 Want to learn more? The Real Business of IT from Harvard Press is a must-read for CIO teams, CEOs and CFOs facing the challenge of managing enterprise IT expenses. More than just buzzwords, the march to complete and accurate IT cost transparency has the capacity to drive real, sustained savings for enterprises while optimizing costs and communicating the value of technology use to meet strategic business objectives.