Project Portfolio Management, IT Financial Management Blog

Allocating IT costs so the business gets IT! The keys to IT financial management

Exercise Bike.jpgLast week in my post “Driving transparency for IT financial management — are we all speaking the same language?” I discussed the importance of relating IT costs to a business service, business process or business capability level. For IT leaders, this involves changing the way they view IT. They need to shift from solely thinking about the things IT does (the how) to thinking about IT enables (the what).

 

Richard Hunter and George Westerman said in their book, “Real Business of IT: How CIOs Create and Communicate Value,” that IT is like an exercise bike. The value proposition of the exercise bike is not in the pedals, handlebars or the other components; it is in the ability to lose weight and get in shape. The challenge for all IT organizations is to help their business understand where the money spent on IT is going. At the same time, IT has to act more like a businessperson when it comes to discussions regarding spending priorities and control. But how do you get IT leaders to make this change when IT collects its costs by cost center? The simple answer is by utilizing allocation.

Driving transparency for IT financial management — are we all speaking the same language?

FT.jpgI have been meeting with CIOs and other senior IT leaders over the last couple years. And they always say they want to provide better IT transparency. Yet driving transparency into IT costs, benefits and risks turns out to be difficult. It’s so difficult (but so important) that I want to look at what’s keeping IT leaders from realizing this goal.

Customer Case Studies, Best Practices and Product Roadmaps for PPM and ITFM

The PPM and ITFM tracks at HP Software Universe 2010 in Washington D.C. are confirmed and ready for you to build your own customized schedule!


Customer speakers include companies such as Motorola, PricewaterhouseCoopers, NBC Universal, Bank of New York Mellon, AIG, United Stationers, Deloitte, KPMG, National Bank of Australia, United Airlines and more.


In addition, HP experts will be presenting on best practices for project portfolio management and IT financial management, as well as product roadmaps.


Register today and create your own schedule!


P.S. Sam Donaldson will be our emcee and Olympian Dara Torres will be our conference keynote!


 


 


 

HP Sponsorship: IT Financial Management Conference


By Richard Hawes, Sr. Product MarketingManager, IT Financial Management, HP


The IT Financial Management Association (ITFMA) provides a comprehensive education program on the principles and practices used to financially manage IT organizations.


The ITFMA is running a conference at the historic Jefferson Hotel in Richmond Virginia June 21-25 in Richmond Virginia. HP is a major sponsor. This is a real practitioner's event and the conference and optional pre-conference workshops will cover principles and practices used by IT financial management for planning, controlling, pricing, evaluating and decision making purposes. There are multiple, focused conferences housed in one event and attendees can move freely between them on the days they are registered.


Come along and hear the latest from HP as well as from leading practitioners on a wide range of topics.


Visit the ITFMA website at http://www.itfma.com for more details or to download a conference brochure. For details on HP's participation, contact me.



 




 


 

IT Financial Management: Getting the information you need today

By Bruce Randall, Senior Manager, HP Products


 


Recently I attended the Financial Planning and Forecasting Summit in San Diego and presented HP's vision for IT Financial Management to Chief Financial Officers (CFO), Controllers and Directors of Finance attending the show. Here are a few observations about the attendees:


1. Only one CIO or IT leader was present in the room out of roughly 100 in total


2. Only one participant operated IT as a business today (Profit/loss), and this attendee was employed by an IT outsourcing business


3. About half of the participants said IT reported to the CFO/Finance


4. Only one-third stated that IT budgets would increase this year, while the majority of the remainder said IT budgets would remain flat


5. I was met with agreement among much of the audience when I stated that demand on IT will continue to increase at a substantial rate regardless of budgets remaining flat


6. According to a recent survey, 40 percent of an organization's capital spending goes to IT - most attendees in the room found that figure to be too low.


7. The only person in the room who was confident that their IT department was capable of providing accurate budget plans uses HP Project and Portfolio Management Center to achieve this goal.


My presentation addressed why IT Financial Management is needed as a discipline and how today's corporate financial systems fall short in meeting the unique requirements of IT. I discussed how IT Asset Management and Project Portfolio Management solutions can address IT Finance requirements. Because these solutions support the entire IT process lifecycle for managing portfolios, programs, projects and assets, they capture right level of granularity needed for strategic and tactical decision-making.


Enterprise Management Associates, an industry analyst firm, authored the white paper "Taming the Elephant: Achieving Financial Management for IT and it provides many of the details my presentation covered. To learn more about HP's specific solution for IT Financial Management, go here.

A lighthouse customer tells all: How to gain transparency into IT spend and show the value of IT

By Ken Cheney, Director of Products, HP Software


For many companies, the recent recession was the perfect opportunity to take the time and effort to discover just where the IT budget is being spent. Implementing processes and procedures to help make IT operations more transparent -- and show the value of IT at the same time -- is essential for long-term operational excellence. It's all about transforming IT into a performance-based, metrics-driven organization.


Last June HP Software & Solutions announced a new solution designed to do just that:  help CIOS better understand their IT spend, improve decision-making, operate more efficiently, and better align IT with the business.   The HP Financial Planning and Analysis (FP&A) solution enables chief information officers (CIOs) to run IT like a business and demonstrate the business value of IT services. The solution brings together software and services to provide improved visibility, governance, accountability and predictability to IT finance. It is one of a number of solutions that are part of HP's IT Financial Management (ITFM) Portfolio.


Since HP FP&A and ITFM are fairly new, it's always interesting to see how our customers are  progressing with both implementing the cost-management solution and how well the solution is helping with the overall goal of renovating IT financial management. 


A recent Networld World article provided insight on customer John Hancock Financial Services. The article highlights how John Hancock leverages HP ITFM to focus their attention on IT cost management.  It explains why the company decided to purchase HP ITFM, the steps the company is taking to implement, and their progress to date in renovating IT financial management at the firm by 2011.  I think it's worth the read.  Let me know what you think.


 

Answering the “Value” question – in clear terms the business understands

By Ken Cheney, Director of Products, HP Software


A common question I hear these days from IT executives is, “How can your company help me demonstrate the value of IT to the business?” 


Business executives are looking at every opportunity to drive out costs and increase the efficiencies of operations.  As a result, many IT executives are being challenged by stakeholders -- such as the CEO, CFO and line of business (LOB) counterparts -- to justify the value of IT investments and the business services delivered. 


For IT, the challenge is that it typically can only provide some of the answers needed to determine the entire “business value.”  To completely answer this question, the total costs related to each business initiative must be understood and compared against the results – requiring the IT organization to be able to measure business impact.   More often than not, many IT executives don’t have this information readily available – but they need it to make these types of assessments. 


What does the business need from IT to justify continued IT investment?   In my view, it means providing the business with an understanding of what it is paying for. This includes providing answers to the following questions that should be top of mind of IT executives:


1.       What are the services being provided by IT for the business?


2.       How will/can IT charge the business for these services provided?


3.       What quality and performance metrics is IT measuring around the service?


4.       Is IT in compliance with service level agreements?


These are just a few of the core questions IT needs to credibly answer.


In my next few posts, I’ll examine each of these questions more closely, including how HP customers are using HP solutions to answer these challenges and demonstrate its value to the business.

Project & Portfolio Management in a turbulent economic environment

By Bruce Randall, Director of Product Marketing, HP Project& Portfolio Management


 


At the start of 2009, I was curious how the market for project and portfolio management software would continue to fare – in light of the “less than ideal” economic news coming out nearly every day.  To me (not that I’m biased or anything J) it seemed that HP Portfolio Management (PPM) Center was the ideal kind of software that customers would select to weather the storm – specifically using it to cut costs and gain visibility into the entire project portfolio.


 


Fortunately, industry gatherings, HP-sponsored events and anecdotal conversations with customers confirmed my hunch about the value of the solution. Since the start of 2009, I have personally witnessed the following:


 



  • Our annual HP PPM Center Customer Advisory Board meeting in June was oversubscribed. Hearing that industry conference rates were off by 30% or more, we braced for a similar drop-off. Instead, our customers more than showed up – which told us HP PPM Center was strategic to their business and was seen as a critical component to reigning in costs and improving project outcomes.

  • The Gartner PPM and IT Governance Summit , held in Orlando September 14-16, was very busy with unexpected attendance figures – more than doubling the initial forecasts. Our customer, Thrivent Financial, spoke on how they have used HP PPM to gain significant value in better managing their resources.

  • At our European PPM Customer Forum event in Turkey September 30 – October 1, we were again over capacity in spite of serious travel restrictions for many of our European customers. All customers saw this as important opportunity to discuss how the software works and the processes that are important to them.


 


I feel confident in saying that word has gotten out that HP PPM Center can deliver significant return on investment – in just one year.  The Gantry Group 2008 ROI Benchmark Study for HP PPM Center demonstrated this – and the last 18 months have only confirmed what the study revealed: If you want to cut costs while still growing the business, you need a tool that gives you visibility into the whole portfolio, a way to govern demand, and automated project portfolio management to deliver lasting efficiencies.


 


 


 

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About the Author(s)
  • Brian is a Product Marketing Manager for Application Development Management Solutions with and previously for Project and Application Portfolio Management, with extensive experience in presales and implementation roles.
  • This account is for guest bloggers. The blog post will identify the blogger.
  • The voice of HP PPM. Keep up with us for all things Project and Portfolio Management.
  • I help IT leaders to understand how well IT is performing from a business perspective.
  • Evangelist for IT Financial Management (ITFM), IT Governance and IT Portfolio Management, consulting IT organisations for Close to 15 years on principles of good governance.
  • WW Sr Product Marketing Manager for HP ITPS VP of Apps & HP Load Runner
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