ITIL Financial Management
It is important to spend money wisely. Financial Management is a strategic tool that is relevant to all three service provider types. Increasingly, internal service providers are asked to operate with the same levels of financial visibility and accountability as their external counterparts. In the case of external service providers, the innovative provision of technology is the core revenue generating capability of their company.
Financial Management allows an organisation to understand the worth of their IT services in financial terms. It will also aid the understanding of the value of the assets provisioning those services and allows us to set realistic budgets. The key thing is to be able to attribute a value to the services being offered. This will
cause a change in perception of IT and its value to the business.
As part of Financial Management we should be asking questions such as:
Which services cost us most to deliver and why?
What services are we offering, what is the demand for these services and how much does it cost us to provide them?
How efficient is the way we deliver service compared with the alternatives?
Where are our greatest service inefficiencies?
Which areas represent the highest priority opportunities for us to focus on in terms of Continual Service Improvement?
The Business Case
For each and every service offered there should be adequate business justification. A good business case will consider both qualitative and quantitative dimensions. In the case of the latter financial analysis is often key. A business case may take many forms but broadly speaking all will include objectives and impact and will take the following form:
This serves to present the objectives addressed by the service. What is the proposal about and what do we hope to achieve?
Methods and assumptions
It is important to state any assumptions so that these may be compared later against reality. If there is a variance then this may identify why the expected outcome did not materialise. It is also important to document methods. These may help to identify scope, time periods and costs which will help with the evaluation. The likely beneficiary will also need to be identified.
The business impact.
This is where the beneficial outcomes, both financial and non-Âfinancial are identified. Clearly a commercial service provider will mostly be concerned with profitability of service whereas the not for profit organisation may propose a business case which focuses on altruism. Nevertheless both providers will need to show a degree of financial and organisational performance.
Risks and contingencies
The identification of possible alternate outcomes which might be experienced and the identification of ways of reducing the likelihood or accommodation of the outcome if it occurs.
This will contain the way forward in support of the business case.
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James P Hall is among top ITIL managers and has written various books on this subject