Financial Management of IT: Do You Know Where You're Going?

Financial Management of IT: Do You Know Where You're Going?

Companies are wrong when they assume they are implementing software application tools, as what they're actually doing is implementing a set of processes.

Drawing on Lewis Carroll's classic line from Alice in Wonderland—“If you don’t know where you are going, then any road will get you there”—financial consultants Mike Stiglianese and Larry Maisel observe that successful financial management of IT processes begins with understanding the difference between the “what” (the process) and the “how” (the tools).

As they see it, it’s important for companies to increase maturity in their IT financial management processes if they expect to improve their overall IT maturity. “The single most important factor in having a successful IT financial management implementation,” they explain, “is having a thorough understanding of what needs to be implemented before deciding on how to implement it.”

They offer the following graphic as a depiction of the stages of an IT financial management maturity model:

level-of-maturity

In determining the process, companies need to consider:

• Senior leadership must lead an ITFM project. There must be a good understanding of who is sponsoring the project—IT, the business units, finance. ITFM maturity is a ‘top-down’ initiative.

• What are the current ITFM-related processes? Mapping existing processes will help determine gaps and areas for improvement.

• How readily available are current cost and usage drivers?

• How are business and IT performance currently being measured?

• Who will be the winners and the losers with a change of ITFM processes? Can the losers also be turned into winners?

Learn more about IT financial management at Business Finance, a companion site of IndustryWeek and part of Penton’s Manufacturing & Supply Chain Group.

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