Thought Leadership & Tools
ITFM Pathway to Success: Step 3 – Data Readiness
An easy-to-follow framework for implementing an effective IT Financial Management (ITFM) program.
By Pete Hidalgo, Chief Customer Officer at MagicOrange
Modern organizations need an easy-to-follow framework for implementing an effective IT Financial Management (ITFM) program. MagicOrange has introduced its ITFM Pathway to Success, a step-by-step approach specifically designed to help business leaders manage the finances of the IT organization. It provides management a better understanding of the delivery and consumption of services as the framework acts as a bridge between collective financial systems and service management systems.
The ITFM Pathway to Success framework is specifically designed to help those leaders responsible for managing the finances of the IT organization, such as CIOs, CFOs, IT Finance leaders and their respective teams.
This framework requires a series of planned and measured steps that have to be executed in a methodical manner over a period of time to achieve the true benefits of implementing ITFM processes and best practices.
Step 1 was to assess and plan, to review the IT strategic plan, the current and future goals and objectives, to determine how it aligns with the business strategy. In Step 2, services needed to be defined to ensure that the charges for IT services are transparent and that the business understands them. The next Step of this process is to ensure high quality service consumption and cost data in order to achieve cost transparency and ultimately, implement showback / chargeback to the business.
Step 3: Data Readiness
During this step, the following tasks need to be accomplished:
- Assess the availability and quality of the cost and service usage data using the MagicOrange data assessment tool as illustrated in Figure 2 below. It will provide a quantitative rating for all applicable data.
- The assessment should be done for each service and weighted according to cost.
- Usage data should also be assessed and scored in the same manner. These ratings will provide the basis for planning future actions for the automation and showback / chargeback model design found in Steps 4 and 5 e.g. services with high quality cost and usage data could be candidates for unit-based charging.
Figure 2 – Data Quality Assessment Tool
4. Display the data ratings using the MagicOrange data quality heat map, shown in Figure 3, which facilitates presentation to decision makers. This will provide a comprehensive view and understanding of their current data quality and what areas need improvement.
Figure 3 – Data Quality Heat Map
Here are some key considerations:
- Do not wait to begin the ITFM improvement journey due to imperfect data because one will never have perfect data
- Use the available data and develop a plan to improve it over time
- Usage data needs to be aligned with services and identifies users of those services down to the business unit or cost center level
- Cost data is required at the individual service level. If that data is not available, then one needs to modify the financial system general ledger and chart of accounts. As an alternative, one can use the MagicOrange tool to align costs to the IT services.
Ask the Experts
MagicOrange experts are well equipped to guide its customers through the step-by-step process to ensure they realize all the benefits of a successfully implemented ITFM framework. Recognizing the complexity of the overall journey to ITFM maturity, these experts will provide customers with a progressive cloud-based ITFM tool and professional guidance that brings full transparency into the value of technology in the organization.
Recognized by Gartner, MagicOrange is an established ITFM solution and successfully implemented at a number of large, complex and multinational enterprises across various industries.
Guided by the MagicOrange ITFM Pathway to Success framework, customers can now drive cost optimization throughout the organization by approaching savings initiatives systematically and holistically, from the perspective of both IT supply and business demand.