Over the last 30 years, Information Technology has evolved into one of an enterprise’s most strategic disciplines. And, as the pace of technological innovation continues to accelerate, this trend will only become more pronounced.
But as IT departments rush to meet the needs of their internal customers (and to keep track of shadow IT as it rears its head in every department), we find ourselves faced with some issues such as:
- Has IT been able to scale, from a business perspective, with their rapid rise in strategic importance?
- Is IT well positioned to help the business leverage technology quickly and efficiently?
- Does IT have good visibility and tight control over the myriad of IT assets and expenses now being deployed throughout an enterprise?
- Can IT report up the ladder and across the business what the true allocated costs of IT expenditures are so that the business can make informed decisions about how to proceed?
- Can IT track and efficiently manage its own costs – from hardware to software to maintenance to outsourcing and beyond?
Historically IT departments are staffed by technical resources equipped to solve technical problems. The ability to explain the problems they face and the solutions they provide from a business and financial perspective is a discipline lacking in many enterprises. Further compounding this knowledge gap, has been a lack of IT-focused solutions to provide simple, cost center-specific views of expenses being accrued. This communication gap was confirmed in the CIO Executive Council’s 2015 “Power of Effective IT Communication Survey” where only 4% of IT leaders believe that they are highly effective in communicating with their non-IT colleagues.
Directing business units to new, vetted technology in an organized fashion enables a company to take advantage of new innovation while minimizing risk. IT departments must be seen as more than gatekeepers but as knowledgebases that can provide best practices and innovation solutions to ever changing needs.
Understanding one’s own internal IT landscape gets ever more complicated as shadow IT grows and the consumerization of IT puts more and more power in the hands of end users. Onboarding and offboarding employees (and all of their various touch points to corporate data and applications) now requires heavy involvement from the IT department.
But IT financial management is an investment with a return. According to Gartner, there is as much as a 38% difference in overall IT spend between average and best performers. This difference is not only driven by better sourcing through better knowledge but also by providing cost transparency to business units so they can better control their overall IT budget.
In summary, we are seeing the growing importance of IT Financial Management systems and processes for three main reasons:
- To facilitate and accelerate technology deployments
- To tighten controls and improve security
- To improve expense management
According to KPMG, “IT transparency has become the new mantra for many IT organizations as they struggle to become more relevant and responsive to the business.” IT organizations that successfully deploy IT Financial Management programs including systems and processes, will not only help their companies succeed but they will enhance their overall strategic standing.