Page 28 - EngineerIT February 2022 UPDATED

RUNNING IT AS A BUSINESS

Delivering true value through calculation of the chargeback cost of IT
business services.
At the same time, the business view
needs costs organised in a way that clearly
IT financial transparency displays the cost of IT services in business
terms. This enables business executives to
easily link IT expenses with business needs.
by Stephen Coull, Keyrus Sales Director Multiple budget views enable the
holistic management of IT spend, allowing
IT to take on a role as a business partner
ne of the challenges in this arena is increasing difficulty to accurately understand that can help the company in achieving
their costs, and the drivers of these costs. In a services-focused world, establishing its strategic goals, rather than being seen
Othe actual costs of services remains the key focus; greater levels of granularity are purely as a cost to the business. Moreover,
often needed to establish these and to deliver true cost transparency. it enables the IT budget to evolve from a
This is especially true in a shared services environment where a range of administrative cost tracker to a strategic tool, providing
and support services, such as IT, HR and financial services, are provided to the entire better alignment with the company’s goals.
organisation.
In today’s interconnected and highly complex business environment, it is more important Investment planning — Effective
than ever for both the business units that deliver and those that receive these services, to Project Financial Management
fully understand the costs as well as the drivers associated with them. Effective Project Financial Management is
This can be achieved through cost transparency, an approach designed to provide a process which brings together planning,
business, finance and shared service owners with detailed, meaningful insights into their budgeting, accounting, financial reporting,
respective areas. By gaining a clear understanding of the costs and volumes of their shared internal control, auditing, procurement,
services product and service portfolios, enterprises can make fact-based strategic disbursement and the physical
decisions regarding shared service investments. The shift performance of the project. The
overall aim is to be able to
Driving profitability and unlocking value through cost transparency of focus from manage project resources
Business leaders need to understand their profitability and costs. Once traditional products properly and achieve the
they do, it enables them to utilise assets efficiently and show accurate to value-added services project’s objectives.
profit margins. It provides actionable insights that will drive business by many companies The best way to do
transformation and future growth. represents new this is to begin running
Cost transparency is designed to enable businesses to understand and challenges. IT as a business, by
attribute costs more accurately. It also enables those people responsible for undertaking an investment-
specific areas of the business to understand which costs they are able to control, as planning process that focuses on
well as which levers they can pull to effect changes in these. the entire life cycle of an IT investment,
This is because it creates both visibility and understanding regarding the costs and allowing costs to be effectively managed
volumes of their entire IT product and service portfolio. This enables the organisation to make and value to be maximised.
informed and fact-based strategic and tactical decisions regarding its IT investments. At its core, effective Financial
According to Gartner, effective IT cost transparency is built on a foundation of six Management is an on-going process that
framework pillars, each of which plays a key role in creating the kind of transparency features a cycle of good management
regarding costs that makes them significantly easier to understand and, therefore control. habits, including planning, organising,
These six pillars outlined by Gartner, when implemented properly, will enable CIOs to run directing, and controlling the financial
IT as a business and provide the financial transparency needed to optimise cost and value. activities – such as procurement – in a
To truly understand cost transparency and the enormous value it offers to an consistent, responsible manner. It also
organisation, it is worth taking a deeper dive into what makes up each of these six pillars, and means applying general management
how they are individually and collectively able to deliver value to the enterprise. principles to the financial resources of a
By taking a closer look at each of these, we can determine how IT can best deliver value project.
to the enterprise. A crucial part of any project’s financial
management is post-project evaluation.
IT Budgeting There needs to be proper workshops
It is important to understand that budgets are a management tool used to allocate and documentation on the outcomes
resources in order to achieve the enterprise’s objectives. As companies transform into digital of planned objectives. Once these are
businesses, there is a need to select, implement and manage IT more effectively. To achieve evaluated, the business will be in a much
this, a multi-view approach to the IT budget is necessary. better position to learn from its mistakes
In other words, managing costs in technology stacks requires both a technical view, and plan more effectively for future
which offers the ability to analyse and benchmark internal technology spend, as well as the projects.

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