2017 Gartner IT Finance, Procurement, and Asset Management Conference


Nicus is a Premier sponsor at the upcoming 2017 Gartner IT Finance, Procurement, and Asset Management Conference (ITFPAM) in Nashville, Tennessee, September 11-13. This event presents a great opportunity to network, learn, and cultivate the skills needed in the ITFPAM disciplines.  Analysts and thought leaders will share best practices to help improve professional development and competencies.

On Monday, September 11, at 2:00 PM Nicus’s own Rob Mischianti will present a solution provider session with a client, who utilizes Nicus M-PWR to improve IT budgeting, increase financial transparency and enhance technology business management.

If you’re in Nashville attending the ITFPAM (http://www.gartner.com/events/na/it-financial-procurement-asset-management), be sure to stop by our booth and attend Rob’s session on Monday. It’s guaranteed to be an informative and enlightening session! 

Hybrid Cloud


Over the weekend, I was driving through the mountains in Virginia and had the opportunity to stop at various scenic overlooks to view the beautiful mountains at sunset in the horizon.  As an IT Finance professional, I am always in search of relevant analogies between my personal and professional life.  Yesterday, the clouds in the sunset vistas made me think about cloud computing and storage in our industry.  Too literal of an analogy to be provocative?  Maybe, but we all know this is a very hot topic to say the least.

The thought leaders in our industry predict a significant transition from on-premise to cloud-based infrastructure solutions.  With more cloud service providers entering the market, basic economics predicts a significant decrease in pricing of those cloud services.  As tempting as it might be to run out and move everything to the cloud, there are some important things to consider before making this change.  Therefore, many experts believe organizations will eventually land with a combination of traditional on-prem and cloud-based compute and storage solutions over the next 5-10 years. 

We are planning to have a forthcoming series of blog posts on this topic but wanted to introduce one of the biggest factors when deciding how to leverage cloud services.  As Accounting and Finance professionals, we are always concerned about the dollars and cents, right?  Naturally, one of the biggest things to consider are the various facets of cost:

 

100% On-prem

Cloud

Upfront cash flow

Significant cash outlay for hardware, software, and labor to stand up new environment

Minimal upfront costs

Long term cash flow

Internal labor costs to maintain as well as vendor licensing & maintenance costs

Consider rates & charges after year one as they often increase

Utilization

Less flexible as on-prem infrastructure is a sunk cost

More flexibility to adjust capacity for over- or under-utilization

Expense recognition

Generally capitalized and amortized/depreciated over multiple years

Generally expensed to P&L when invoiced by service provider

Cloud migration costs of existing apps/workload

n/a

Re-platforming is labor-intensive and expensive.  Also, FASB has made it more difficult to capitalize costs associated with migration to cloud.

Data transfer costs

n/a

Consider the costs associated with data transfer between apps on-prem & apps in the cloud.

Existing application life cycle

n/a

Consider the stage in app/workload life cycle to ensure the benefits to re-platform exceed the cost to do so.

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Increasing Adoption of Your ITFM Processes


The success rate of your ITFM program increases with broad user adoption.  This can be a challenge for many reasons but there are things that you can do to ensure success!  Three of the most important are:

Communicate Clearly and Often

Having the right communication plan and change management processes in place is often overlooked and undervalued.  When you embark on your ITFM journey, identify the various groups that will be impacted – whether as information contributors or information users.

Utilize change management communication tools such has newsletters, brown bag lunch and learns, and smaller group presentations to inform audiences and collect feedback.  Have the one on one conversations with Executive Leadership to ensure that they support the initiative and communicate the value to their organizations.

Ensure that you have effective ways for users to ask questions, provide feedback and share any concerns or ideas.  Involving various stakeholders in the process is necessary to get buy-in early-on in the journey.

Know your Audiences

There are several and they all have different needs!  Understand those needs so that you are able to produce meaningful, actionable data for those audiences.

Service Owners

  • This group is accountable for Total Cost of IT Services and Unit Costs of IT Services
  • Ensure they buy in to the methodology used for calculating the IT Cost (but resist making changes that increase complexity without value!)
  • Ensure they buy in to the methodology and metrics for distributing IT Service Costs to End Users and Applications
  • Design your ITFM Process to provide:  
    • Insight into the true drivers of cost
    • Unit Cost information with analysis regarding fixed versus variable expense impacts
    • Metrics and Data that support various initiatives surrounding a particular IT Service Offering such as Tech Refresh, Virtualization, Cloud

Application Owners

  • This group is accountable for Total Cost of an Application including Hardware, Software & Labor
  • Ensure they buy in to the Allocation metric that will be used to charge costs to Consumers
  • Design your ITFM Process to provide:  
    • Insight into the true drivers of cost
    • Notification about renewal dates with enough lead time for making decisions about changing direction
    • Metrics and Data that supports various initiatives surrounding Applications such as Re-Platforming, App Rationalization, Sourcing

Consumers

  • Ensure they buy in to the Data sources and metrics that will be used to charge various IT Services and Applications
  • Design your ITFM Process to provide:  
    • IT Costs supporting various Business Services
    • Cost of Applications and the value the business is receiving
    • Business decisions and options that can drive utilization of IT services

Take it in Phases

It is very tempting to want to get from A to Z immediately.  There is value in where you are going and it makes sense that you want to get there quickly, however, it can be beneficial to phase your implementation-especially if you are starting from scratch.

  • An initial phase could involve sharing preliminary numbers with IT partners to engage them and encourage data quality and completeness 
  • Don’t automate all data sources and reporting immediately.  As you begin to use reports, questions will inevitably arise that may cause changes to metrics and/or methodologies.
  • Have a base set of reports in the initial phase then get feedback from data owners and consumers on what additional reporting would be useful.
  • As you move along the ITFM maturity continuum, you will go from providing transparency to providing insight and context.  As much as we want it to be like flipping a switch, it can take some time to get all the way there.

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Enabling Actionable Transparency Through Allocated Views of IT Spend


Basic ITFM:

Quality ITFM views provide visibility into IT costs at all levels of an organization, and can deliver actionable data many different decision makers. 

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Elements of Effective IT Planning


An important component of successful IT planning, budgeting and forecasting is the ability to align top-down financial targets with bottom-up plans. Some organizations establish top-down targets and then turn the annual budgeting process, along with a mandate to meet those numbers, over to IT or corporate finance. Other organizations require detailed, bottom-up planning, and then rollup numbers at the top, so that the plan meets strategic targets. Neither of these approaches results in planning excellence. Instead, IT organizations should provide initial guidance from senior management’s top-down perspective on strategic goals, objectives, and expectations. Then, department, branch, and line of business managers can build a plan from the bottom-up, indicating how each intends to meet established goals. The process requires recurrent versions for these approaches to meet and be reconciled.

The result is a plan that is supported by:

  1. Managers, because they helped create it and will be rewarded for meeting it.
  2. Senior management, because operational goals are aligned with strategic goals.
  3. IT and corporate finance, because they add value to a productive, collaborative effort, rather than demanding participation in a worthless exercise.

Not only should strategic and operating plans be aligned, but plans between different regions and functional areas should also be coordinated. Best practices include direct involvement by portfolio and line of business managers from across the enterprise along with a collaborative approach to budgeting and forecasting. In addition to understanding strategic goals, managers also need to know what other functions are involved in planning. For example, in an insurance company that is planning a new claims system rollout, marketing needs to increase advertising, and customer service representatives need to be trained. But the plan should also consider new headcount, computer systems, and so on. Such collaborative planning can be accomplished through an iterative process that lets managers forecast and share alternative scenarios. IT finance plays a key role in facilitating the coordination of plans across the IT organization, which helps ensure that operational tactics are aligned with financial targets throughout the organization.

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