ITIL Financial Management is part of the Service Strategy phase within the ITIL framework. This phase also includes service portfolio, demand and business relationship management, as well as strategic management topics.
ITIL Financial Management is part of the Service Strategy phase within the ITIL framework. This phase also includes service portfolio, demand and business relationship management, as well as strategic management topics.
The Service Strategy phase leads to best practices across the enterprise. This article focuses on helpful efficiencies in finance that improve business operations. IT organizations with complex expenditures can benefit from this information.
By 2021, global IT spending will exceed $3.5 trillion, so now is the perfect time to adopt ITIL financial management.
Service valuation is a big part of IT financial management. It includes all factors impacting the value of the service to internal or external clients. Accounting, pricing and budgeting are the major functions of professionals in IT financial management.
Benefits of using ITIL framework for IT finance include:
Let’s look at some of the different components individually.
Accounting determines the efficiency of the IT department from cost-benefit analysis and classification perspectives.
The following factors help you determine the lifetime costs of projects:
Offset the expenses with expectations for:
Classify and track the following components:
IT budgeting requires allocating funds to a mix of day-to-day expenses and innovations to keep the company up-to-date with its competitors, including:
Charges are the prices clients pay for your companies products or services. To determine the appropriate cost, prices charged by competitors are a big factor. However, there has to be enough revenue to cover the cost of service delivery, including IT solutions and overhead.
This is harder to put a number on for IT services consumed by internal customers — including the cost of management software, help desk services and software and hardware dedicated to internal cost centers. In this case, the costs are absorbed by allocating IT costs to the departments that use each of these assets.
ITIL Asset and Configuration Management covers inventory management. Having a well-categorized inventory makes it easier to provide accurate forecasts and prevents lost sales due to backorders and inefficient delivery operations.
In this phase, business leaders audit all aspects of inventory tracking, such as:
ITIL financial management covers all aspects of managing IT financials and makes costs, benefits and assigned value a key component in ranking and prioritizing for technology spend to get the biggest bang for your buck.