Insights
While spending on digital transformation has increased year by year for the last 20 years, it has gained extra speed with the COVID-19 pandemic. The COVID-19 pandemic and its ensuing conditions have accelerated transformation around the world, driving demand for contactless services, cloud solutions, and collaboration apps.
In the coming years, it is expected that 70% of organizations worldwide will increase their use of digital technologies, transforming their existing business processes in a way that encourages new levels of customer engagement, increasing employee productivity and business flexibility.
What is IT Financial Management (ITFM)?
IT Financial Management (ITFM) is the scope of business processes performed to optimize businesses' IT budgets and expenses. IT financial management aims to build an IT structure aligned with business objectives to create a successful digital transformation and business future.
IT financial management is the process of shaping the IT infrastructure by analyzing the IT value and costs of applications, hardware systems and services under the responsibility of IT departments. IT financial management is not a one-time process. In order for it to achieve its purpose, companies must adopt it as a culture and implement it regularly.
Why is IT Financial Management Necessary?
Budget is critical for businesses of all sizes. A high IT budget does not always ensure that the right IT investments are made. IT leaders want to use their budgets in the most efficient way to create a functional and optimized IT environment. Implementing the ITFM process enables companies to make better decisions around their IT spending.
From the past to the present, we have witnessed that many large-scale companies fail in digital transformation due to the wrong technology investments. Because there is no single truth in investments made in technology. Each company's sector, operation structure and purpose are different from each other.
Based on all these, it is clear how important and necessary IT financial management is for companies. By applying ITFM, businesses can create an IT environment that is compatible with their current budget and business goals and will lead them to success.
3 Steps of IT Financial Management
The steps in IT financial management vary from firm to firm. The IT size of the firm plays an important role in this. In this section, we will examine how financial management is performed in IT in general.
Increase Visibility in IT
A more visible IT environment is needed to optimize IT costs. For this reason, the beginning of this process is to establish a structure where we can obtain information about our current IT assets. IT asset management is a great option for this.
IT asset management is a framework and covers the business processes for creating inventories with details of all IT assets in a company. By applying ITAM, companies can know which applications, hardware, systems and integrations they have. IT asset management enables to increase IT visibility.
Therefore, it is recommended that companies also adopt ITAM if they want to implement a financial management process to optimize IT costs. ITAM supports the process of making strategic decisions by providing information about the company's current technology inventory.
Set Business Goals and Priorities
As we explained in the previous part of the article, the business structure and goals of each business are different from each other. That's why you need to determine your goals and priorities by examining your current business processes and IT structure. In this way, you can detect and get rid of products and services that are not a priority for your business processes but cause high costs.
Compare With Equivalent Products and Services
The number of players for the sale of products and services in each sector has increased. This means that companies have more alternatives when purchasing a product or service. IT leaders can turn this to their advantage. IT leaders must evaluate alternatives to the components of IT costs, both in terms of capacity and cost. Companies can perform cost optimization by choosing the lower-cost products and services with the same function.
IT Financial Management Software
Small-sized companies can perform their IT financial management processes in spreadsheets, although limited. But in medium and large enterprises, IT structures are large and contain many products, services, systems and integrations. For this reason, ITFM processes cannot be realized through spreadsheets.
Our IT cost management software helps companies optimize the costs of all assets in their technology inventory. Our IT financial management solution offers interfaces through which companies can view and manage their IT costs comprehensively.
Loggle is an end-to-end IT asset management solution.
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