Recent Posts

08/31/15

IT departments are increasingly pressured to have dual roles: operate as a utility provider while also partnering with the business to drive innovation. While there is no one-size-fits-all approach to managing the business of IT, some key financial metrics can help you balance these two responsibilities. This blog series will run every Monday for the next few months and discuss a financial metric that you can use to run IT like a business.

08/24/15

Service costs are comprised of your unit costs, plus the costs of the activities and products that constitute the value of the service to the business. For example, a desktop service includes more than just a PC (hardware). It also includes the setup, maintenance, technical support, network, and software. Without those additional components, a desktop is of little value to the business consumer.

08/17/15

Very few organizations truly understand the total cost of ownership for their business applications, which are the main cost driver for IT and often represent a significant expense for the business units. This is unfortunate. In one case study prepared by MIT Sloan School of Management, a large insurance company discovered that one business unit was being undercharged (via chargebacks) by $12 million, or more than 10% of their total infrastructure costs.

08/10/15

IT departments are increasingly pressured to have dual roles: operate as a utility provider while also partnering with the business to drive innovation. While there is no one-size-fits-all approach to managing the business of IT, some key financial metrics can help you balance these two responsibilities. Today, get a brief overview on budget versus actuals forecast. 

08/03/15

In demonstrating financial value to the business, there is no single metric better than operating profit. Operating profit is your total revenue less your operating expenditures. Higher profits and a higher margin mean you are delivering value efficiently.

Operating margins for internal IT organizations vary considerably, depending on the agreed upon methods for determining value. For example, many CIOs agree on much more favorable service rates (values) than can be found on the open market, thus limiting their operating margins.

07/27/15

Gartner recently predicted that many IT organizations will begin using the Economic Value Added (EVA) measure to determine and communicate the value provided by IT. EVA provides an effective measure of profitability from the operations of a business unit from the perspective of the shareholder. It does so by essentially reducing the net operating profit (after taxes) by the average cost of capital for the business unit.

07/21/15

The TBM Council recently hosted the kick-off meeting of the IT COST Commission (ITCC) in Washington, DC to agree on the structure and key topics of discussion to create a federalized model for gaining transparency into agency IT spending. Find out about other key takeaways and what's next.

07/20/15

IT departments are increasingly pressured to have dual roles: operate as a utility provider while also partnering with the business to drive innovation. While there is no one-size-fits-all approach to managing the business of IT, some key financial metrics can help you balance these two responsibilities.

07/13/15

IT departments are increasingly pressured to have dual roles: operate as a utility provider while also partnering with the business to drive innovation. While there is no one-size-fits-all approach to managing the business of IT, some key financial metrics can help you balance these two responsibilities.

04/02/15

Are you a technology leader looking to connect with your peers to share insights and gain knowledge? Then the Technology Business Management Council workgroups are for you!

04/02/15

The increasing number and importance of technology investments has fueled the growth of the IT finance profession, and a recognition of the highly varied levels of experience, qualifications, technical knowledge, skills and roles associated with IT finance leaders. The problem is, too many IT finance leaders still don’t get the respect or appreciation for the contributions they make, or could be making. Find out what the TBM Council is doing to address this.

02/19/15

Digital innovation is fast becoming the key to success. Firms are racing one another with investments in mobile apps, big data, analytics and back-office automation to win customers, grow profits and manage risk. As a result, the demand for digital is looming large in their tech budgets. How are successful firms stepping up to the task?

11/04/14

Key takeaways from the 2014 TBM Conference

Over 700 CIOs, CTOs and other IT leaders gathered at the annual Technology Business Management Conference in Miami last week. Based on the session content and my conversations at the event, one theme stood out clearly: “The business” needs clarity and simplicity from their CIOs. 

10/07/14

IT departments continue to face pressure about justifying technology spend and driving more impact with less budget. IT leaders are now realizing the benefits of implementing a solution to improve cost efficiency, tighten alignment with business priorities, and increase the impact of IT spend.

08/24/14

Get a quick primer on net present value (NPV), a method of determining the return on investment from a projected stream of cash flows. It reflects the current value of expected cash receipts less expected cash paid out for a project or investment. In discounting the cash flow, most organizations use their average cost of capital or another discount rate that reflects their cost of money.