Show me the money. Better yet, show me the value!

Is IT finance really about IT resource governance?

 

Last week, I got to sit in on a customer advisory meeting prior to the opening of HP Discover. The participants worked in businesses as diverse as oil and gas, consumer goods, insurance and consultancies. We asked them about problems they were having with IT financial management. Their pain points centered on the following:

 

  • The ability to show value to the business
  • The ability of the business to understanding there were limits to IT investment
  • The business finding that IT costs were too high

When we got down to details, customers stressed the importance of transparency, a magic word that came out of everyone’s mouth. Transparency was deemed necessary for everything from project expenditure decisions to rationalizing existing services, and even included lower-level aspects like infrastructure. One customer said that when pricing out infrastructure-per-month, it resulted in a 52 percent reduction in aging infrastructure, adding “Our customers are no longer holding on to aging infrastructure when they know there is a cost for it.”

 

It soon became clear that what we were talking about was extremely strategic to our customers. This led me to ask whether we had mislabeled our topic as “IT financial management”; we settled on “resource governance processes” as a better descriptor for IT financial management. Participants wanted users to focus less on the cost of each expenditure, and more on the value of each expenditure. One participant pointed out, of course, that IT doesn’t have stellar track record when it comes to presenting the value IT delivers—but, he went onto to say that’s changing. We need to move from a service-provider to a value-provider model, he said, and that cloud and SOA are driving the pace of this change.

Everyone at this point agreed that IT financial processes on spreadsheets don’t provide transparency and can’t get them where they need to go. They also agreed that if you can get your finances in order, you can then optimize processes. One participant put it simply: It is about understanding and demonstrating value and being able to relate it to costs. Another chimed in that it is about showing where are you are spending time and money–it is about the resources of IT. While there was some nervousness about transparency, everyone agreed it is where they need to get to. We need to be able to show total value across IT investment. Finance, if positioned correctly, can positively change IT culture.

 

So IT finance is about creating value transparency in order to build trust with business customers. It is about showing the value of service provided. The takeaway in this session: Customers must become educated buyers. By giving customers visibility into where IT is spending poorly, they can help us get rid of expenditure. It’s their money after all. This will allow IT, finally, to govern resources and deliver the most possible value for business customers.

 

Related links:

 

Solution page: HP ITFM

Twitter: @MylesSuer

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About the Author
Mr. Suer is a senior manager for IT Performance Management. Prior to this role, Mr. Suer headed IT Performance Management Analytics Product ...
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