Good to be back.

I apologize for slowing down in the last few weeks. I was extensively immersed in an amazing flow of new customer engagements, a new version moving to QA and lots of company foundation work that really bumped us several levels ahead, enabling response to the growing demand in the market. Stay tuned!

On a separate subject and more on a professional aspect, I am being asked by customers again and again, “Where to start with IT Financial Management?” Well, here is a quick maturity road map we have developed for organizations to follow when starting down the path of IT Business Management.

Phase 1 – Understand & Communicate TCO of IT Services

• Create a cost model for highest cost applications. Mostly use percentage allocations in the cost model.
• Provide cost visibility to selected business units.
• Compare to industry or internal benchmarks.
• Data: general ledger, timesheets, blended rate for labor, invoice breakdown from external service providers, industry benchmarks.

Phase 2 – Plan and Track IT Budget, Optimize IT Cost

• Expand cost model to additional applications and new business and technical services.
• Introduce more and more usage-based cost allocations.
• Establish a formal budget and demand planning process based on service-based costing.
• Provide cost visibility to all business units and involve all business units in budget planning.
• Define and compare various what-if and forecasting scenarios.
• Consider selected cost optimization approaches as possible scenarios, e.g. server consolidation.
• Compare actual to plan on a monthly basis and re-forecast.
• Data: service usage, CMDB, utilization.

Phase 3 – Optimize IT Demand Through Chargeback

• Define cost model for majority of IT services.
• Move most of cost allocations to usage-based.
• Set service unit rates and publish a price list.
• Establish a formal chargeback process. Produce monthly IT bill for business units.
• Track cost recovery margins.
• Increase the number of evaluated cost optimization approaches.
• Data: currency conversion table

Best served cold and built one at a time!