BlogWhy it Matters: Driving Organizational Value with ITFM and ITEM Alignment

Why it Matters: Driving Organizational Value with ITFM and ITEM Alignment

March 22, 2018, Expense Management, Financial Management

In our last blog post, we talked about the importance of workflow integration between IT Service Management (ITSM) and IT Expense Management (ITEM) in relation to driving value across IT departments. In Part 2 of our “Why It Matters” series, we’ll explore how finance can achieve greater visibility into IT spend when IT Financial Management (ITFM) and IT Expense Management (ITEM) solutions are properly aligned.

Impact of Decentralized Technology Spend

According to a recent forecast by Gartner, worldwide IT spending is projected to total $3.7 trillion in 2018, an increase of 4.3 percent from 2017. With these exploding costs, there is now more complexity and risk around managing IT and technology demands across the enterprise. We’ve seen many organizations struggle due to increased spend, oftentimes not aware of actual assets in use, who is using them, and the actual cost. Meanwhile, IT departments are facing significant pressure from their organization in helping the enterprise compete through technological innovations and infrastructures. Furthermore, IT departments are needing to add (and keep up) with spend categories like usage-based network spend, mobility, and cloud computing, which then becomes more complicated through different pricing models based on contracts and business units. The result is data overlap along with unnecessary spend that can go unnoticed.

Impact of ITFM/ITEM Alignment

From a financial perspective, controllers and business managers find it challenging to conduct root-cause analysis associated with significant IT cost changes or seasonal variability without a unified approach that aligns ITFM and ITEM. IT Financial Management (ITFM) tools enable organizations to compare IT business value and costs across the entire IT portfolio. To help put this into perspective, think of ITFM solutions as the bookends of the solution portfolio where one end helps organizations with budget planning and the other end benchmarks actual costs to forecast and chargebacks to business units. ITFM solutions often pull data from a variety of sources, including the ERP system’s General Ledger, spreadsheets and feeds from other IT usage log systems. On the other hand, ITEM solutions serve as the engine that does all of the behind the scenes calculations of that data. ITEM can go much granular than ITFM into cost details since it tracks costs to specific IT assets such as product, feature and usage detail. While an ITFM solution is using the high-level cost data from ITEM, the real value comes from the details that the ITEM solution provides.

Through the alignment of these solutions, the finance line of business has more visibility into IT costs, and in return, IT can demonstrate the real value they bring to the organization. Other benefits to the finance team and overall organization include:

  • Increased cost transparency, improved budgeting, and forecasting
  • Justify increases and decreases in technology spend
  • Better management of costs allocation and chargebacks based on actual consumption
  • Reduce organizational risk and maintain compliance

By connecting the ITFM solution with the finite details provided by an ITEM solution, organizations can enhance the granularity of cost visibility and potential for cost optimization across the most complex aspects of their IT portfolio. Overall, an integrated ITFM/ITEM approach can attribute to the overall success of the organization’s business units, with the C-suite gaining positive results from these cohesive and streamlined integration points. CFOs can leverage this information to better justify technology investments and critical needs. With more visibility into actual consumption, CIOs can promote greater accountability across the organization. With an integrated and strategic approach to managing communications services, enterprises can gain greater accuracy, real-time access to information, and more control over their communications spend.

Interested in learning more about how your organization can connect the dots with these solutions to create an entirely integrated IT management lifecycle? Download our whitepaper How Expense Management Drives The Larger IT Management Ecosystem.