IT financial management starts with the basic idea of IT cost transparency. The traditional financial methods of the corporation fall short in their ability to adequately capture the cost of IT. Traditional financial methods capture expense types like salary, travel, hardware, software, and telecom but these expense types fail to really convey what is happening within the technology department. The problem is pervasive, and a solution is now available, cost transparency.
Cost transparency starts by properly mapping traditional IT costs within the corporation to standard IT services that better describe how those costs work together to produce a technical solution or outcome. This process, often referred to as a cost model, is the basis for IT financial management practices like TBM.
We’ve Started Our TBM Journey. Now What?
While IT cost transparency is powerful in its own right, and often delivers the first set of actionable results, its long term effectiveness is limited. Cost transparency assumes that the answer to core IT cost questions are clear once the cost is visible. The conclusion most organization reach after a few months of cost transparency is the exact opposite.
Cost transparency, while foundational to a solid IT financial management practice, once implemented generates one of two responses. It either drives entirely new questions or gets completely ignored. Neither outcome is good for IT, the business, or the burgeoning IT financial management practice. Questions that can’t be answered feel like a step backward. Business units and finance ignoring the results undermines the value and the credibility of the TBM / ITFM practice, or worse, IT as whole.
The IT Cost Transparency Wall
This effect — unanswerable questions or indifference — are what we refer to the IT Cost Transparency Wall. Believe me, we have seen many organization hit it, and hit it hard. The good news is the wall is predictable and not insurmountable. It is not the fact the wall exists that is the problem. In fact, since we know the wall is there, we can leverage it as a spring board to accelerate the organization’s IT financial practice to new heights.
If you find yourself hitting or sitting atop the IT Cost Transparency Wall, contact us to show you how to leverage your position and gain even greater outcomes from your TBM investment.
Read other blog posts in this series written by leading ITFM expert William Miller: