Join Mark Thomas for an in-depth discussion in this video Financial management for IT services, part of Cert Prep: ITIL Foundations.
- The first process we talked about in service strategy was the IT Service Portfolio. We talked about that just a little bit ago. Now let's start talking about the financial management, more specifically financial management for IT services. What is this really all about? Financial management for IT services is really about providing the business in IT a quantified value of the IT services that are being provided. We're talking about dollars. In this financial management we need to secure the appropriate level of funding to design, develop, and deliver services that meet the strategy of the organization.
Within the service strategy portion it makes sense that we have financial management within here. If you think about this as the gate keeper of funds, the process that helps us look at the cost, and the cost to quality and understand the differentiation between the cost and quality. A lot of folks look at hey value or quality has a certain cost with it, so we try to keep that link in there and look at the balancing of what we call the supply and demand. The scope, which is really the drive and what I want to really point out in financial management.
These three things here, budgeting, accounting and charging. Actually what I like to call these, I like to call these the ABCs of financial management. And it's pretty easy to remember from that perspective. Accounting, budgeting, and charging. Well let's first, it's out of order a little bit, let's start with A, accounting. What are we talking about on the accounting side? The accounting is basically knowing where the money was spent, keeping records, keeping books. Of course, you probably have to have a financial management system to allow you to do this, but understanding what those are, possibly by cost, by activity, and so on.
That's the A, accounting piece of that. The other aspect or the other piece of this is what we call the budgeting. On the budgeting side, it's planning where the money will go. Budgeting looks at predicting the income or expenditures involved annual. Which might be our typical annual budgeting, financial cycles that we see right down here. It would also include the operational, which are the monthly pieces that we're looking at. The third one we have is what we call charging. Charging is hey, how do we make money on this.
It's the process that for services that are consumed or used by customers, there has to have an excellent practice in place for us to be able to understand how those services are charged and how we collect money to pay for those services. Again, we're going along financial cycles the annual, and the operational side of the house. This process is a major input to what we call the business case. We hit the business case a little bit earlier in this presentation. When you're looking at the above areas, you've got two distinct pieces there that we talked about the planning and the operational.
But what I want to do is focus, just for a couple of seconds, and talk to you about some of the objectives therefore of IT financial management that we don't see up on the slide here. The objectives therefore would include one, define and manage a structure to identify manage and communicate the cost of service provision. Have a means to be able to do this. Assess and communicate the financial impact of new or changed services. Again, what we're looking at in the future. Secure the funding. How much is it going to cost? We're early in the phase of this.
Enhance a stewardship of use of service and customer assets. That's usually done with service asset and configuration management. Understand the relationship between expenses and income and ensure a balance between the two. Manage and report on this. Execute the policies, account for the spend forecast, define the cost recovery methods that we might have. Financial management, the gatekeeper of funds. Think about the ABCs of financial management. Accounting, budgeting, and charging.
ITIL® is a registered trade mark of AXELOS Limited. This ITIL Foundations course is offered by Interface Technical Training, ATO of EXIN.
Skill Level Advanced
Qualification scheme3m 51s
1. Service Life Cycle
2. Service Management as a Practice
3. Key Principles, Models, and Concepts
4. Life-Cycle Phases
5. Life-Cycle Processes: Part One
6. Life-Cycle Processes: Part Two
7. Service-Management Functions
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