Maximising
Technology ROI
with ITFM

  • Best practices for building the ITFM business case

Investing in ITFM is an essential catalyst for driving strategic initiatives such as spend optimisation, digital modernisation, cloud migration, and establishing IT  Budget accountability through showback. Regardless of the well-known benefits of ITFM, CIOs and technology leaders are faced with opposition due to an unclear business case and lack of perceived value.

Many IT organisations face difficulties when trying to convey the value of ITFM to a wider corporate audience since ITFM tools are viewed as redundant systems that compete with existing Financial ERP systems and CPM tools. Failing to effectively communicate how ITFM enhances the broader business functions can lower its perceived value and create resistance.

On this journey we identify the most common arguments that drive resistance to ITFM and why IT leaders struggle to properly communicate the value of ITFM and related tools. By leveraging the 3 steps discussed below, IT leadership will be able to effectively communicate the business case for establishing a new ITFM practice, procure the tools necessary to support this new function and convey a compelling need for ITFM that will urge your organisation to take action.

Phase 1

Understanding the ITFM Business Case

Align ITFM with business strategy

Technology leaders need to understand their current roadblocks and properly align priorities to remedy shortcomings and enhance future capabilities. Understanding how company initiatives align with the desired future state is key when building a business case that articulates the benefits of ITFM.

Numbers don't lie

The business case should utilise accurate data to present the current situation in order to benchmark and measure the proposed benefit. The value proposal should be accompanied by quantifiable metrics and business outcomes that your IT organisation clearly understands and will commit to delivering.

Identify top priorities

Since ITFM touches all aspects of your technology organisation it is important to identify three to five top priorities that are essential to the future success and competitiveness of your business. Once you have shortlisted your top priorities, use these initiatives as the primary foundation and focus of your business case.

With all the success stories and increasing adoption of ITFM it’s hard to understand why companies struggle to recognise the benefits inherent within the ITFM business case. An effective business case should empower senior leaders to confidently justify investing in new technologies that will provide a competitive edge and prioritise this investment above other options. The ITFM business case needs to clearly outline the proposed value, potential risks and organisational changes required by ITFM and align these three aspects to corporate strategy and high priority initiatives.

Stakeholder Alignment:

positioning ITFM within your organisation

With all the success stories and increasing adoption of ITFM it’s hard to understand why companies struggle to recognise the benefits inherent within the ITFM business case. An effective business case should empower senior leaders to confidently justify investing in new technologies that will provide a competitive edge and prioritise this investment above other options. The ITFM business case needs to clearly outline the proposed value, potential risks and organisational changes required by ITFM and align these three aspects to corporate strategy and high priority initiatives.

Identify stakeholders

Engaging with stakeholders is an integral step in identifying the IT leaders, IT Tower Owners, systems and application owners who will help evangelise the benefits of ITFM, establish benchmarks, set targets and provide the inputs necessary for your ITFM initiative. Identify and partner with a Technology Executive to champion your business case and remove any potential roadblocks as they arise. Collectively, your stakeholders must be aligned with your business case and agree with the proposed benefits since they will directly impact the funding and resources allocated towards their priorities. Partnering with stakeholders will provide the following benefits:

  • Aligns ITFM across the business and helps communicate the wide-spanning influence it will have on your business objectives.
  • Encourages stakeholder engagement and establishes an obligation to promoting ITFM principles throughout your organisation.
  • Establishes responsibility and empowers stakeholders to drive the value of ITFM.

Stakeholder engagement will help promote organisation-wide backing of your business case.

Phase 2

Communicating the value of ITFM

Partnering with IT Finance is an important step in establishing a strong financial argument for your business case. Identifying opportunities to avoid and reduce costs using a consistent, data-driven methodology backed by Finance will help bolster the strength of your business case and clearly define the proposed benefits of ITFM. Business cases should outline how ITFM will impact each strategic initiative to improve the financial outlook, competitiveness and agility of your technology organisation. The following table shows some scenarios where the value of ITFM should be communicated:

Quantifying ITFM Value

IT Infrastructure Cost Optimisation

“It’s not enough to simply reduce IT spending; CIOs must reinvest in growth and transformation to deliver more value.

Those who fail to engage in optimisation risk having savings decisions imposed on them by an advisory organisation with less understanding of IT or digital technology opportunities.”

Gartner Survey Reveals Business Value or Benefits Realization Is the Leading IT Cost-Optimization Pri-ority for CIOs

“By increasing the focus, visibility and accountability of IT spending throughout the enterprise, CIOs can work to continuously optimise IT spending while also leveraging savings for innovation investments.”

IT Cost Optimization Should Be an Ongoing Discipline (gcom.cloud)

Identify stakeholders

Infrastructure cost optimisation is one the more prevalent business case objectives for realising the financial benefits of ITFM. This encompasses eliminating or consolidating shadow IT, decommissioning unused resources, reallocating capacity, and benchmarking infrastructure costs internally and against industry peers.

Application spending and the associated labour & infrastructure resources typically account for over 50% of IT spend. This expense can be optimised by:

  • Decommissioning and retiring applications and related resources that no longer provide business value or have been replaced by newer technology. Legacy applications require ongoing patching, maintenance and support that drain valuable resources.
  • Hunting down your shadow IT to gain a full picture of SaaS, IaaS, and PaaS spend across your business. Ensure that you’re only paying for the licenses and resources you consume on an ongoing basis.
  • Reducing requests for added capacity by identifying your critical applications and current resource consumption. Reallocate compute, storage, and network resources that are directly tied to strategy and driving business outcomes.

Showback/Chargeback & Bill of IT

Since the business is the primary consumer of IT resources it is important to educate your organisation on how changes in consumption impact IT spend. Leveraging showback/chargeback and IT billing helps shape demand through accountability and will empower the business to find areas for cost reduction and optimisation. Aligning your budgeting process with actual consumption and accurate unit costing will reduce unforeseen IT spend and budget variances which will help shrink run costs (operate) and free up resources for transformation (innovate).

Cloud migration

Shifting resources from on-premises to Public Cloud IaaS & PaaS products present opportunities for increased innovation, financial agility, and cost optimization. ITFM should provide foundation for any cost benefit analysis used to calculate the expected cost reductions related to migrating resources to a Third-Party Cloud Provider. This analysis can be enhanced by:

  • Leveraging the internal unit costs used by your ITFM function to provide a granular comparison between your IT organisation’s current benchmarks and the rates offered by Third Party Cloud Providers.
  • Using your projected resource consumption generated through the ITFM process to calculate the overall costs of migrating to Third Party IaaS & PaaS products.
  • Partnering with your Cloud Center of Excellence (CCoE) or FinOps function to fully understand the impacts of shifting resources. Your ITFM & CCoE functions should coordinate efforts to ensure that the projected benefits of cloud migration are realised, and risks are fully understood.

Intangible benefits

The intangible benefits of ITFM include a faster budgeting cycle, better conversations between IT and Service Owners, improved spend transparency, better alignment between resources and strategy, and an enhanced understanding of how resources are combined to create value internally and for your customers. Overall, your organisation will be positioned to be more competitive, financially agile and aware of your business risks.

Phase 3

Communication

How you communicate your business case and the related content to your organisation will ultimately determine its effectiveness. Your message should be transparent, tied to business priorities, data-driven, create a sense of urgency and call Senior Leaders to action.

Send a consistent message

Be sure to use your company’s official template to present the information in a format that will be well received by the audience. Using a standardised template will also reduce the chance of having your business case rejected due to missing inputs or miscommunication when articulating your objectives. Be sure to provide links to the more detailed documents that explain your assumptions, the data sources and methodology.

Requirements

Use the template as a guide to understand which inputs are required and use it to create a checklist to ensure that all details have been provided. Leverage the information you have then identify the sources you can contact to fill in any gaps. Existing financial reporting, G/L systems, ITSM tools and IT Tower Owners are great places to start in order to obtain any missing inputs required for your business case.

Scenario evaluation

Be sure to convey that you have compared different scenarios or products in order to develop your business case for what you believe to be the best choice. Divide your alternative options into different categories such as:

  • No improvement - doesn’t enhance your current capabilities or reduce expenditures and request the approval committee to acknowledge the risks involved
  • Ineffective - doesn’t provide enough benefit to remedy current shortcomings or concerns
  • Out of Scope - provides the benefits necessary to fulfill current needs but includes costly extra features that we are not positioned to benefit from now
  • Meets current/future demands - this includes the solution that you are suggesting in the business case. This option satisfies current and future requirements and will help avoid additional investment

Resource types:

Team
People outside of the ITFM function will be active participants in the process whether you decide to implement a new tool and form an internal team to manage your new capability or outsource your ITFM function to a managed service provider. The ITFM function will require dedicated internal personnel who will rely on other internal resources from IT operations, vendor management, project management and IT Finance for insight and data inputs. In addition to data owner, tower owner and service owner data inputs it will be necessary to identify partners in other IT functions and Finance to work closely with the ITFM personnel to ensure that business objectives are successfully executed.

Internal Functions
The ITFM function relies on other processes within Finance, IT operations and the business to deliver value. Creating synergy between these processes are essential to maximise the proposed benefits of ITFM.

IT Infrastructure
Tools and technology will be a major enabler for your organisation to run a success ITFM practice. The disparate data sources that exist within your systems will be critical inputs for ITFM reporting & analysis and will need to be aligned with the ITFM data architecture.

As you craft your business case it is important to consider and include the impact these resources will have on strategic initiatives and the success of your ITFM function. Be sure to thoroughly explain the additional costs related to utilising these resources to avoid push back due lack of consideration.

Required resources

ITFM business cases should include the non-financial resources that will be required to drive the success of the ITFM function and support related business priorities.

Parameters

Be sure to document any assumptions made to build your business case and provide a clear explanation of how and why you made them. This should include any assumptions used by other teams and similar initiatives or projects that have assumptions that are dependent on ITFM.

Risk management

Document dependencies related to other systems such as ServiceNow, Oracle Financials, SAP, asset management tools or PMO systems. You should also consider any impacts to or from existing or future processes tied to the success of your ITFM capability. Risks and dependencies should be mapped out to gain a clear understanding of how your business case could impact the future state of current operations and initiatives.

Your ITFM Business Case Journey – Audit List

Use the list below to make sure your ITFM Business Case follows best practices.

Develop the foundation of your ITFM business case by aligning it to your business strategy. To create value for your business you must understand the:

Determine which priorities and strategic initiatives are aligned with ITFM. Stakeholder engagement is a key success driver for ITFM and is needed to:

Bolster your confidence with data. Developing a cost benefit analysis to support your business case can present a challenge but be sure to align your proposition with business priorities. Review these guidelines as you calculate the cost savings and identify the intangible benefits related your ITFM function:

It’s showtime! Ensure that you utilise the standardised processes and templates approved by your organisation and consider all important factors to clearly articulate your message.

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