Manage the IT-related financial activities in both the business and IT functions, covering budget, cost and benefit management, and prioritisation of spending through the use of formal budgeting practices and a fair and equitable system of allocating costs to the enterprise. Consult stakeholders to identify and control the total costs and benefits within the context of the IT strategic and tactical plans, and initiate corrective action where needed.
Foster partnership between IT and enterprise stakeholders to enable the effective and efficient use of IT-related resources and provide transparency and accountability of the cost and business value of solutions and services. Enable the enterprise to make informed decisions regarding the use of IT solutions and services.
- Asset Register
- Evaluation of investment and services portfolios
- Actions to improve value delivery
- Proof-of-concept scope and outline business case
- Investment return expectations
- Business case assessments
- Program business case
- Feedback on portfolio and program performance
- Program benefit realization plan
- Program budget and benefits register
- Results of benefit realization monitoring
- Accounting Processes
- IT Costs Classification Scheme
- Financial Planning Practices
- Prioritization and ranking of IT initiatives
- Budget allocations
- IT Budget and Plan
- Budget Communications
- Categorized IT costs
- Cost allocation model
- Cost allocation communications
- Operational Procedures
- Cost data collection method Internal
- Cost consolidation method Internal
- Cost optimization opportunities
Manage Finance and Accounting
- Define processes, inputs, and outputs, and responsibilities in alignment with the enterprise budgeting and cost accounting policies and approach to systematically drive IT budgeting and costing; enable fair, transparent, repeatable and comparable estimation of IT costs and benefits for input to the portfolio of IT-enabled business programs; and ensure that budgets and costs are maintained in the IT asset and services portfolios.
- Define a classification scheme to identify all IT-related cost elements, how they are allocated across budgets and services, and how they are captured.
- Use financial and portfolio information to provide input to business cases for new investments in IT assets and services.
- Define how to analyze, report (to whom and how), and use the budget control and benefit management processes.
- Establish and maintain practices for financial planning, investment management, and decision making, and the optimization of recurring operational costs to deliver maximum value to the enterprise for the least expenditure.
Prioritize Resource Allocation
- Establish a decision-making body for prioritizing business and IT resources, including the use of external service providers within the high-level budget allocations for IT-enabled programs, IT services, and IT assets as established by the strategic and tactical plans. Consider the options for buying or developing capitalized assets and services vs. externally utilized assets and services on a pay-for-use basis.
- Rank all IT initiatives based on business cases and strategic and tactical plans, and establish procedures to determine budget allocations and cut-off. Establish a procedure to communicate budget decisions and review them with the business unit budget holders.
- Identify, communicate and resolve significant impacts of budget decisions on business cases, portfolios, and strategy plans (e.g., when budgets may require revision due to changing enterprise circumstances when they are not sufficient to support strategic objectives or business case objectives).
- Obtain ratification from the executive committee for the overall IT budget changes that negatively impact the entity’s strategic or tactical plans and offer suggested actions to resolve these impacts.
Create and Maintain Budgets
- Implement a formal IT budget, including all, expected IT costs of IT-enabled programs, IT services, and IT assets as directed by the strategy, programs, and portfolios.
- When creating the budget, consider the following components:
- Alignment with the business
- Alignment with the sourcing strategy
- Authorized sources of funding
- Internal resource costs, including personnel, information assets, and accommodations
- Third-party costs, including outsourcing contracts, consultants and service providers
- Capital and operational expenses
- Cost elements that depend on the workload
- Document the rationale to justify contingencies and review them regularly.
- Instruct process, service, and program owners, as well as project and asset managers, to plan budgets.
- Review the budget plans and make decisions about budget allocations. Compile and adjust the budget based on changing enterprise needs and financial considerations.
- Record, maintain, and communicate the current IT budget, including committed expenditures and current expenditures, considering IT projects recorded in the IT-enabled investment portfolios and operation and maintenance of asset and service portfolios.
- Monitor the effectiveness of the different aspects of budgeting and use the results to implement improvements to ensure that future budgets are more accurate, reliable, and cost-effective.
Model and Allocate Costs
- Categorize all IT costs appropriately, including those relating to service providers, according to the enterprise management accounting framework.
- Inspect service definition catalogs to identify services subject to user chargeback and those that are shared services.
- Define and agree on a model that:
- Supports the calculation of chargeback rates per service
- Defines how IT costs will be calculated/charged
- Is differentiated, where and when appropriate
- Is aligned with the IT budget
- Design the cost model to be transparent enough to allow users to identify their actual usage and charges, and to better enable predictability of IT costs and efficient and effective utilization of IT resources.
- After reviewing with user departments, obtain approval, and communicate the IT costing model inputs and outputs to the management of user departments.
- Communicate changes in the cost/chargeback model with enterprise process owners
- Ensure proper authority and independence between IT budget holders and the individuals who capture, analyze, and report financial information.
- Establish time scales for the operation of the cost management process in line with budgeting and accounting requirements.
- Define a method for the collection of relevant data to identify deviations for
- Define how costs are consolidated for the appropriate levels in the enterprise and how they will be presented to the stakeholders. The reports provide information to enable the timely identification of required corrective actions.
- Instruct those responsible for cost management to capture, collect and consolidate the data, and present and report the data to the appropriate budget owners. Budget analysts and owners jointly analyze deviations and compare performance to internal and industry benchmarks. The result of the analysis provides an explanation of significant deviations and the suggested corrective actions.Ensure that the appropriate levels of management review the results of the analysis and approve suggested corrective actions.
- Align IT budgets and services to the IT infrastructure, enterprise processes, and owners who use them.
- Ensure that changes in cost structures and enterprise needs are identified, and budgets and forecasts are revised as required.
- At regular intervals, and especially when budgets are cut due to financial constraints, identify ways to optimize costs and introduce efficiencies without jeopardizing services.