ITIL V3 Financial ManagementCost Transparency and ITIL V3 Financial Management
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 element of ITIL as it aligns the business value of IT Services to the cost to provide those services. Establishing an IT Cost Transparency solution enables organizations to quantify both cost and value. Until recently, there have been no technology solutions aimed at helping ITIL practitioners calculate and analyze this cost-value analysis. The vast majority of IT departments rely heavily on spreadsheets to understand IT costs—a flat, static and limited tool for the task at hand—and do next to nothing to report on the value of IT services. Yet a good, dynamic IT Cost Transparency solution empowers decision makers to make hard decisions to minimize IT costs and maximize IT business value. Quantifying IT Service Value and CostsITIL 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, by tracking help desk activity and the volume of incident tickets associated with poor service performance. Value derived from warranty is high when the system is online and functioning properly (meeting SLAs). Service level activity can usually be derived from monitoring, incident and change data and the cost of not meeting service levels can be assessed in terms of the impact to the end users of the service. Costing out a service can be a very complex task as services are comprised of many cost contributors. Tangible items such as servers, switches and software usually make up the list of direct costs; however even these can be indirect when spread between different services. For example: A main backbone switch handles traffic for multiple services. Therefore, any associated switch cost should be allocated proportionally to each service. Indirect costs such as support, facilities, and management overhead are often overlooked when assessing service cost. Unfortunately, these costs often can outweigh direct costs by a significant margin and not including them in a service assessment can lead to poor strategic IT decision making. Automating Cost Transparency and Service Financial Management with ApptioApptio’s IT Cost Transparency solution was designed from the bottom up to address this exact issue. Apptio is a Software as a Service (Saas) solution for IT Cost Transparency. It automates the modeling and tracking of IT costs enabling an accurate, fully-loaded cost per IT service, in accordance with the ITIL v3 guidelines. With an accurate cost model in place, Apptio enables the analysis of cost drivers to identify cost reduction targets, provides an accurate, fully-loaded “bill of IT” and improves forecasting and budgeting with tracking to actual expenses over time Apptio automates the input of data from various sources, including asset catalogues, Help Desk software, spreadsheets and the general ledger so that the model is accurate and up to date. With the Apptio on demand IT Cost Transparency solution IT organizations can accelerate their adoption of ITIL V3 Financial Management best practices and:
Automating ITIL V3 Financial Management at NYK Systems Research InstituteLike any large, Fortune 500 IT organization NSRI engineer and support a complex set of infrastructure that supports thousands of custom applications which are core to their business. The inherent complexity of those IT services did not always equate to greater value – in fact it often times detracted from business value as the complexity resulted in greater system downtime. NSRI struggled to quantify the total costs of their current services and the business value (reduced costs and increased utility and warranty) that would result from optimization efforts across their service portfolio. NSRI adopted the Apptio on demand service offering to gain greater transparency into the costs of the IT Services and implement better ITIL V3 service financial management discipline. They rapidly created an accurate IT services costs model and then, using the analytical capabilities within Apptio, were able to trend costs over time to visualize the effects of increased business load on support of some of the older applications. This was combined with data on the financial impact of IT outages to provide a compelling business case for investing to rationalize their IT Service portfolio. Benefits
As you align your IT organization around services per the ITIL guidelines, be sure that you have the right systems in place to accurate measure and track the cost per service and the value that service provides. Customers such as Alaska Airlines, Blue Cross Blue Shield of Kansas City and NYK Systems Research Institute have trusted Apptio for their IT Financial Management. To get started today contact us for a Free Demo and on-site Proof of Concept. Or to learn more download ITIL expert Kurt Shubert’s whitepaper on “Optimizing ITIL v3 Service and Financial Management”, our solution whitepaper or one of our customer case studies. OGC (Office of Government Commerce) 2007. ITIL Service Strategy. The Stationary Office. Link to case study Link to ITIL V3 Whitepaper |
