IT Financial Management is the discipline of ensuring that the IT infrastructure is obtained at the most effective price (which does not necessarily mean cheapest) and calculating the cost of providing IT services so that an organisation can understand the costs of its IT services. These costs may then be recovered from the customer of the service.
Costs are divided into costing units: Equipment; Software; Organisation (staff, overtime; accommodation; transfer costs (costs of 3rd party service providers)
These costs are divided into Direct and Indirect costs and may be Capital or Ongoing.
The practice of IT financial management enables the Service Manager to identify the amount being spent on security countermeasures in the provision of the IT services. The amount being spent on these countermeasures needs to be balanced with the risks and the potential losses that the service could incur as identified during a business impact assessment and risk assessment. Management of these costs will ultimately reflect on the cost of providing the IT services and potentially what is charged in the recovery of these costs.
Financial Management Overview
Provide budgeting, accounting and charging services to control, manage and recover IT cost and spend.
Achieve the process mission by implementing:
• ITIL-aligned IT Financial Management policies, processes and procedures
• Dedicated Financial Management Process Owner
• Effective IT budget and planning practices
• Accurate and efficient IT charging and cost recovery for IT services
• Accurate accounting of IT expenditures and revenues
• Reporting on the state and health of IT costs and revenues on a regular basis
• Periodic audits of IT financial information to ensure accuracy
Critical Success Factors (CSFs)
The Critical Success Factors (CSFs) are:
• Effective stewardship over IT finances
The key activities for this process are:
• Perform budgeting for IT services and activities.
• Perform IT accounting activities.
• Perform IT charging and billing activities.
• Provide management information about Financial Management quality and operations.
Key Performance Indicators (KPIs)
Examples of Key Process Performance Indicators (KPIs) are shown in the list below. Each one is mapped to a Critical Success Factor (CSF).
Effective Stewardship Over IT Finances
• Overall cost of delivery per customer
• Percentage of IT costs not accounted for
• Dollar value of budget variances/adjustments
• Percentage of IT financial objectives met
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