ITIL - Financial Management

Financial management for IT services is concerned with helping the business to assess whether its IT Service is doing the best it can with the money it has. The business has to understand the true costs of providing a service and manage these costs professionally. Financial Management of IT Services implements IT Accounting and Budgeting processes, and often Charging processes for these IT Services, allocating IT expenditure to services and recovering the costs of those services from the business customers to whom they are provided.

Budgeting enables an organisation to:

• Predict the money required to run IT Services for a given period
• Ensure that actual spend can be compared with predicted spend at any point
• Reduce the risk of overspending
• Ensure that revenues are available to cover predicted spend (where charging is in place)

IT Accounting enables an organisation to:

• Account for the money spent in providing IT Services
• Calculate the cost of providing IT Services to both internal and external customers
• Perform cost-benefit or Return-on-Investment analyses
• Identify the cost of changes

Charging enables an organisation to:

• Recover the costs of the IT Services from the customer of the service
• Operate the IT organisation as a business unit if required
• Influence user and customer behaviours

The scope of Financial Management of IT Services is taken to cover hardware, software, people, accommodation, external services (e.g. outsourced application development), and transfers (eg IT Service buying PCs on behalf of a business customer.