Financial Management—A Key Component of ITIL v3

The Information Technology Infrastructure Library (ITIL) is the leading collection of best practice guidelines for running an IT organization. Within ITIL V3, Financial Management is about understanding the cost-to-value relationship that is at the very core of the definition of a service. As IT organizations become IT Service Providers under the guidelines of ITIL, it becomes increasingly important to accurately understand the cost of those services. Inaccurate Service costs, due to poor estimations, will cause problems in chargeback or recovery and drive improper behavior with IT Service managers and business consumers. As important is the need to develop proper IT processes around IT Services such as Budgeting, Forecasting, Cost Optimization and Service Cost Allocation that will increase the cost efficiency of IT, shift budget to more strategic IT initiatives and better communicate the value of IT to the rest of the organization.

"Apptio enables us to model the true unit costs of desktops and laptops, and both trend and project those costs on an ongoing basis. Their on-demand delivery model and built-in IT expertise enabled us to easily integrate data from various IT systems, quickly gain visibility into TCO, benchmark against industry metrics, and identify cost saving opportunities that will pay for our Apptio investment within six to nine months." John Shepard, Director Global IT Infrastructure, Starbucks Coffee Company

The Information Technology Infrastructure Library (ITIL) is the leading collection of best practice guidelines for running an IT organization. Within ITIL V3, Financial Management is about understanding the cost-to-value relationship that is at the very core of the definition of a service. Indeed, many IT architects on the leading edge of ITIL implementation are saying that the Financial Management piece of version 3 of ITIL is possibly one of the most important elements of ITIL as it answers the burning questions from business leaders; "How much am I spending on IT, where is it going, what's the value I'm getting and am I getting a good deal?"

Establishing an IT Financial Management solution not only enables organizations to fulfill ITIL guidelines by quantifying the cost and value of IT Services, but also puts in place a framework for greatly improving the cost efficiency of IT operations and driving better alignment of IT with business priorities.

Quantifying IT Service Value and Costs

ITIL V3 categorizes value and cost into specific categories. Value derived from utility is high when the user sees a positive impact on their business tasks. Though this value can be very difficult to quantify, business leaders will naturally prioritize high value services over lower value services when they know the cost of each and have the ability to choose (through a Service Catalogue, formal or not).

Value derived from warranty is high when the system is online and functioning properly (meeting SLAs). Performance to SLA's can be measured by tracking help desk and incident tickets, downtime and performance, providing very real indicators of IT performance and Service value.

Apptio's TBM solution was designed from the bottom up to address support the best practices of ITIL v3.

• Quantifying the fully loaded costs of all IT products and services
• Enabling chargeback or showback of IT costs to the business side by side with Quality of Service data
• Benchmarking IT performance against industry peers for performance management
• Automating the budgeting, forecasting and planning process to align future spend with key business priorities
• Leveraging cost, quality, benchmark, budget and cost driver data to engage in true demand management with business units