ITIL Financial Management for IT Services: Finance in Your Strategy
The Service Strategy stage in the ITIL lifecycle is where IT strategies are aligned to business strategies. ITIL Demand management processes are used to determine risks, service portfolios are reviewed, and then ITIL financial management processes follow. ITIL foundation training covers the ITIL Service Strategy as well as all stages of the ITIL Service Lifecycle. The ITIL Service Strategy stage includes financial management. This ITIL process determines if the strategic objectives in terms new or optimized service delivery are financially feasible. It also determines if it is a good investment decision for the organization. This topic is covered in detail in the ITIL Foundation online training.
The main goals
It allows IT and businesses to quantify the IT Services’ value.
Let’s say, for example, that a telecom operator wants its subscribers to have a new service. Subscribers will be able to see live football scores. ITIL financial management allows for the analysis of how much money this service will generate from the use of subscribers. It also calculates how much money must be invested to introduce this new service. If the output of the analysis is not profitable, it is not necessary to publish this service.
It allows you to calculate the value of individual assets required to perform services.
Take our example. If providing match scores for subscribers to an operator is a profitable business, then the operator must develop the resources and capabilities necessary to produce this service. New servers, new applications and new server administrators are all required. This process includes the financial aspects of valuing these assets.
It allows IT and the business to analyze operational outlooks and forecasts.
As we have already mentioned, it is important to analyze the operational outlooks and forecasts before making any investment in a new service or infrastructure within a service provider company. The IT service manager should ask questions like:
How many servers are required to support this service?
How many engineers are needed to support the system’s operation?
How much does maintenance cost?
These types of forecasts and estimations are part of the ITIL financial management process.
ITIL financial management in collaboration with other business units
This process works in conjunction with many business units to perform a financial analysis of investments, services, and operational outlooks and projections. These business units include:
Operation and support
Organization for project management
It is necessary to determine the operational and support costs of a service provider in order to perform a financial analysis on an investment. Is the new service going to require support 24 hours a day or only during working hours? It will require support on weekends? How many support staff are required to provide support? These are discussed with the operation and support unit.
The project management organization is required to be involved in any new service or project. The scope, schedule, quality, and cost of a project are determined by the project management business unit. It is therefore closely linked to the ITIL financial management process.
The ITIL financial management process works with the application development business unit to determine the application requirements. This includes determining which resources, tools, or equipment are required to develop the services. The ITIL financial management process forecasts and outlandishes based on the requirements and needs of the application development unit.