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July 5, 2006

Service Catalog and IT Financial Management

Boris By Boris Pevzner

As IT Service Management discipline matures, it is fascinating to see how the IT Productization concepts that I’ve been covering in this blog get adopted across a variety of ITSM disciplines.

Take IT Financial Management.  Until recently, IT finances have been managed against cost centers and activity centers defined in General Ledger systems from Oracle, SAP, PeopleSoft.  But this year, the IT Financial Management Week conference in Miami Beach is full of presentations touting the benefits of service-based costing and demand management, where financial management of IT is done in terms of services.  Thus, IT Service Catalog is now rapidly becoming a key enabler for IT costing, budgeting, and demand planning.

To those of us who have been following the evolution of ITSM, this is no surprise.  Every IT executive needs to be able to answer the key questions that are critical for operating an IT organization:

  • Who is using what IT services and how much?
  • How does the performance of my IT organization compare to that of market benchmarks, industry peers, and outsourcing vendors?
  • How does the consumption of IT services vary by business unit or geographical location?
  • How does the actual IT service consumption compare against budget estimates?
  • What are the most optimal demand drivers that I can use to influence my customers’ behavior and to reduce the overall IT spend?

The answers to these questions need to be communicated proactively by the IT organization to its business customers to enable them to plan and manage their IT demand and expenses. 

The only way for an IT organization to achieve these goals is by defining and costing the services it supports in a way that the business customers can understand.  Which is where the Service Catalog comes in, particularly if it is tightly coupled with financial management and demand planning capabilities.

I will post more on this in the next few days. Greetings from Miami Beach!

Posted on July 5, 2006 | Permalink

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Comments

Glad to see you posting again! I hope you and Centrata are doing well!

Doug McClure
BSM/ITSM Blog: http://dougmcclure.net

Posted by: Doug McClure | Apr 5, 2006 7:00:18 PM

The convergence was indeed expected as you rightly point in your article. The real beauty of IT financial management is not only to rationalize and justify on the IT side the way IT funds are spend but also... to know precisely how to charge the Business for the services they have been more than often freely consuming. Business has now the elements to decide how to purchase IT, to be able to initiate IT projects around a true business case: they are provided with what they ask for and have to pay for the costs. Effectively, Business becomes accountable for the IT investments it decides, and this is a very refreshing piece of news.

IT Transparency and Business accountablility seem to eventually reach the ultimate goal: IT and Business talk and they try to align themselve best! It was time...(grin)

Gilles Daquin

Posted by: Gilles Daquin | May 30, 2006 2:38:28 AM

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