IT Financial Management Trends for 2010
Apptio predicts growth in shared IT services and demand for internal IT departments to justify investments in IT spending.
Faced with a variety of IT options such as SaaS and cloud computing, IT and finance leaders are struggling to make informed decisions about how to source their IT services. And, the lack of visibility into spending and utilization often makes it difficult to demonstrate the value IT is providing to the business. So says Sunny Gupta, co-founder, president, and CEO of Apptio, a provider of on-demand IT financial management software in Bellevue, Wash.
“In the battle to minimize costs and the onslaught of outsourced computing models, 2010 will be the year organizations begin executing against the vision of business-IT alignment,” says Gupta, who has come up with his top five IT financial management trends for 2010:
1. CIOs will Adopt Greater Financial Management Discipline. Enterprises will no longer be able to manage IT without automated financial management systems in place. Drastic cost cutting has CIOs realizing they cannot run IT without proper financial management discipline. General purpose spreadsheets or corporate planning systems are no longer sufficient to manage the myriad computing models and dynamic nature of today’s IT infrastructure.
2. CEOs will Require that IT Demonstrate Value of Services. IT organizations that cannot explain the total cost of an IT Service to business leaders will begin losing credibility. Like any service provider, IT must track the cost of delivering goods and services. They must have systems in place to analyze, allocate, and reduce costs, and communicate to the CEO and other business leaders the value IT is providing.
3. Role of the CIO will Shift to a Service Provider. Up until this decade, the role of the CIO has focused on technology. If the business wanted to implement a new application or technology, their only real choice was to obtain support from internal IT.
In the last few years, several forces have gained critical mass to change that model. Internal IT is now one of many options, and today’s CIO must act as a central “service provider,” pooling IT resources for efficiency and delivering services to many different buyers within the organization. As a service provider, CIOs must develop better processes for managing the supply and demand of IT Services, whether sourced internally or externally, and the cost and quality of those delivered from his or her organization.
4. IT leaders Must Understand Cost and Benefit of Cloud Computing and SaaS. Business leaders now have the option of going directly to outside vendors to purchase IT services. This puts incredible pressure on IT to understand their internal cost per service, and whether or not a cloud or SaaS offering is truly better for the business.
Additionally, there is still a lot of hype and uncertainty around the full cost of cloud computing services, requiring more in-depth analysis of the cost-benefit tradeoff of the Cloud. The adoption of SaaS and cloud computing will continue to grow exponentially, and better management systems and cost analysis will be grow with them.
5. Virtualization Drives Shared Services Model. In the past, each business unit owned its piece of IT and managed its portion as an expense of doing business. Today, IT acts as a central service provider to all business units. This distributed shared-services model, accelerated by technologies like virtualization, makes it complicated to accurately track chargeback, usage, and ROI.
The combination of the shared service model and virtualization technologies will drive adoption of more sophisticated IT financial management systems that can track the cost and usage of IT services in this complex environment.
“Today’s IT leaders are faced with the daunting challenge of transforming their IT organizations, and becoming world-class service providers,” says Gupta. “With the cloud providing new computing alternatives and virtualization increasing complexity in IT, it is becoming impossible for organizations to keep track of the cost of IT services, let alone make decisions about where to invest. With the insight Apptio gives our customers, they’ve been able to reduce costs by 10 to 15 percent and automate ITFM processes around IT service costing, budgeting, and cost optimization.”
