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ITIL Financial Management
Increased user numbers and demands for new technologies have caused the costs of IT Services to grow faster than other costs and are perceived as high and inflexible. The complex nature of Accounting for IT usage often leads to dissatisfaction and questionable 'value for money' of the services themselves. IT Services must understand true cost of providing service and manage costs professionally.
 
ITIL Financial Management supports the organization in planning and executing business objectives, and requires consistent application to achieve maximum efficiency with the minimum of conflict. The scope of Financial Management includes Budgeting, IT Accounting and Charging.
 
Benefits of ITIL Financial Management
 
The benefits of itil Financial Management include:
  • Increased confidence in the setting and managing budgets
  • Provision of accurate cost information to support IT investment decisions
  • Accurate cost information for determining the cost of ownership for ongoing services
  • More efficient use of IT resource throughout the organization
  • Increased professionalism of staff within the IT organization
Possible problems
 
The following problems may be encountered when implementing IT Accounting and Charging:
  • Limited understanding in IT Services in Cost Modelling and Charging mechanisms could potentially lead to over-complex and ineffective systems
     
  • IT Accounting relies on planning information internal and external to IT Services Management which may not be routinely available, thus delaying project(s)
     
  • Staff combining accountancy and IT experience are rare, may involve staff external to IT Services whose priorities may differ
     
  • IS strategies and objectives of the organization may not be well formulated, documented and prediction of Capacity requirements are not accurate
     
  • Senior business managers may not recognize the benefits of IT Accounting and Charging, resenting administrative overheads and limitations on workload
     
  • IT organization becomes inflexible to Changes in Users' demands once costs become an influence
     
  • Processes are so elaborate that the cost of system exceeds the value of information produced
     
  • Monitoring tools providing resource usage information are inaccurate, irrelevant, costly to develop and maintain 
Costs
 
The costs fall into three broad categories:
  • Administration and organization costs for planning, implementation, ongoing operations and management of the process
  • Extra computing resources to automate and facilitate IT Accounting and Charging
  • Purchase and support of tools required to carry out the processes
When costs are visible, particularly when Real Charging is in place, demand for some services may fall, assisting organizations to identify and reduce inefficient use of IT resource.
 
 
 

2 VISITOR COMMENTS

2010-08-25 by "help"

Seems to be an interesting post I read the full post since it was in a very well written form

2011-05-16 by "vibhu.bali"

Biggest problem would be to have people who have accounting and ITIL expertise, as well as the managers who have interest in Finance apart from Operations, transition etc.

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Tags; Financial Management, ITIL Financial Management,IT Services,Accounting for IT,implementing IT Accounting
 
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