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Effective IT Financial Management Streamlines Decision-Making by Enhancing Transparency and Stakeholder Engagement, Says Info-Tech Research Group
Tuesday, December 5, 2023
The research and advisory firm's latest findings reveal what mature IT financial management (ITFM) looks like, giving IT leaders principles and a holistic approach to navigate increasing complexity and improve the organization's strategy for ITFM.
TORONTO, Nov. 27, 2023 /PRNewswire/ - As organizations increasingly recognize the importance of financial management within IT, the need for a holistic approach to IT financial management (ITFM) becomes more apparent. Addressing this critical need, global IT research and advisory firm Info-Tech Research Group has released its latest blueprint, "Take a Holistic Approach to IT Financial Management." This timely and research-focused resource is designed to assist IT and business leaders in navigating the complexities of ITFM, offering insights and strategies to transform IT from a perceived cost center into a value-driven part of the organization.
"The increasing complexity of technology and investment in IT has placed significant pressure on the people and processes involved. IT leaders, tasked with managing their departments like a business and making pivotal organizational decisions, face significant responsibilities and stakeholder expectations," says Jennifer Perrier, principal research director within Info-Tech Research Group's financial management practice. "IT financial management (ITFM) is a critical tool for these leaders, enabling them to generate and demonstrate value to stakeholders while facilitating meaningful conversations with business partners and leadership teams. It also highlights the necessary trade-offs for achieving shared goals."
Info-Tech's research highlights the critical role of effective IT financial management in today's complex business environment. The blueprint underscores the importance of aligning IT spending with organizational strategy and the need for transparent, accountable financial practices. By adopting a holistic approach, IT leaders can ensure that their financial management not only supports but also drives business objectives, fostering a culture of strategic investment and cost optimization.
The blueprint explains that ITFM as a practice consists of three general disciplines underpinned by transparency. Maturity can vary across the disciplines, but none will improve consistently or rapidly without transparency backing it up. The three disciplines for ITFM in the firm's new resource are outlined below at a high level:
-- Govern - Build an ITFM Foundation: ITFM governance establishes the
fundamental rules for financial decision-making within an organization.
It encompasses legal and regulatory mandates, defining accountabilities
and responsibilities, and setting policies and standards. Additionally,
it involves managing stakeholder relationships, overseeing
communications, allocating resources, selecting tools, and aligning with
strategic objectives. This discipline involves educating the IT team,
setting up the ITFM governance structure, and standardizing financial
data.
-- Forecast & Budget - Plan & Manage IT Spending: Forecasting and budgeting
are the planning steps for future IT spending and are the most widely
deployed ITFM functions. These functions involve the development of
business cases for new spending, setting spending priorities, projecting
future costs, and securing necessary funding. While the steps involved
in forecasting and budgeting are generally similar across organizations,
there can be variations in terms of time frames and the degree of rigor
applied.
-- Bridge the Divide - Generate & Demonstrate IT Value: This discipline
focuses on maximizing value from IT investments and expenditures. It
encompasses the analysis and adjustment of spending on assets, vendors,
projects, and labor to adapt to evolving business conditions. This
specific discipline is about managing costs effectively and achieving
tangible benefits. Optimizing costs and demonstrating value are the most
advanced yet least practiced aspects of ITFM.
Info-Tech's research emphasizes that the objective of IT financial management is not merely about controlling costs or meeting budget targets. Instead, it's about strategically aligning IT investments with organizational goals and deriving maximum value from every dollar spent. IT leaders are encouraged to adopt a holistic approach, balancing cost optimization with value generation, ensuring their IT initiatives contribute significantly to the overall success of their organizations. By focusing on strategic financial management, IT departments can transform from cost centers to value drivers, fostering sustainable growth and innovation.
For exclusive media commentary from Jennifer Perrier, principal research director and ITFM expert, or to access the complete Take a Holistic Approach to IT Financial Management research, please contact Senior PR Manager Sufyan Al-Hassan at salhassan@infotech.com.
Info-Tech Research Group is one of the world's leading information technology research and advisory firms, proudly serving over 30,000 IT professionals. The company produces unbiased and highly relevant research to help CIOs and IT leaders make strategic, timely, and well-informed decisions. For 25 years, Info-Tech has partnered closely with IT teams to provide them with everything they need, from actionable tools to analyst guidance, ensuring they deliver measurable results for their organizations.
Media professionals can register for unrestricted access to research across IT, HR, and software and over 200 IT and industry analysts through the firm's Media Insiders program. To gain access, contact pr@infotech.com.
For information about Info-Tech Research Group or to view the latest research, visit infotech.com and connect via LinkedIn and X.
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SOURCE Info-Tech Research Group
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