Thought Leadership & Tools
ITFM Pathway to Success: Step 4 – Automation
An easy-to-follow framework for implementing an effective IT Financial Management (ITFM) program.
By Pete Hidalgo, Chief Customer Officer at MagicOrange
The MagicOrange ITFM Pathway to Success is a framework that was designed to guide decision makers through a step-by-step process to help them manage the finances of the IT organization. This includes CIOs, CFOs, CTOs and their respective teams.
To achieve the true benefits of this framework by implementing ITFM processes and best practices, one needs to follow a series of planned and measured steps. The MagicOrange ITFM Pathway to Success has to be executed in a methodical manner over a period of time.
In summary, 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. Services needed to be defined in Step 2 to ensure that the charges for IT services are transparent and that the business understands them. Step 3 was to ensure high quality service consumption and cost data in order to achieve cost transparency and ultimately, implement showback / chargeback to the business.
Step 4: Automation
In order to progress to the next step, Service Costing and Chargeback, businesses first need to automate these processes by using purpose built ITFM software such as MagicOrange.
There are numerous reasons to automate:
- To increase transparency into service usage and costs
- To efficiently produce financial and service consumption reports
- To provide self-service reporting and data access to customers so that they can understand and regulate their service consumption and costs
- To perform monthly chargeback and bill of IT generation
MagicOrange assists customers through their ITFM and cost transparency journey by helping to drive profitability and unlock value. The solution enables efficient utilization of assets, shows accurate profit margins and reduces manual effort. More importantly, it provides actionable insights that will drive business transformation and future growth.
Here are some key considerations:
- Choose an ITFM solution that is based upon existing tools that one is already familiar with e.g. Excel, Power BI or Power Automate. This will help minimize the learning curve and allow one to import and transform the data with little effort.
- Choose an ITFM solution that does not require coding or any specialized skills, this will allow one to maintain the solution.
- Start with basic services with stable data
- Do not depend on external teams for data or process execution
Choosing the right ITFM tool is an extremely important business decision, especially considering the significant investment in time and money. One should therefore conduct a comprehensive Request For Information (RFI) and Request For Proposal (RFP) process before a purchasing decision is made.
In preparation before launching the RFI / RFP process, one needs to answer the following questions:
- What are the objectives?
- Who are the stakeholders? (IT management, service owners, business customers, IT finance, etc.)
- What specific tool capabilities are desired and when? (Service costing, chargeback, planning, benchmarking, etc.)
- Are services well defined? (Refer to Step 2)
- What is the availability and quality of service consumption and cost data? (Refer to Step 3)
- What are the upfront and ongoing costs for the ITFM tool?
- Who is going to manage and maintain the tool?
ITFM tool selection considerations:
- Conduct a RFI process, this is an informal process where one requests information about a product to gain knowledge. This information can then be used to develop a list of leading candidates for the more formal RFP process. The more time one has to learn about the various tools and the capabilities of the different vendors, the better one will be equipped to make a decision.
- Define RFP requirements, evaluation criteria, use cases and a scorecard
- Use multiple teams to score RFP responses and include all key stakeholders from IT and the business
- Choose the top two providers and request a comprehensive Proof of Value (POV) using existing company data and services. Score them based on the POV and then have them propose a contract with pricing.
- In order to obtain the best pricing, conduct a Best and Final Offer (BAFO) round.
- Score both providers based upon final costs and capabilities and select one for contract award.
MagicOrange is an established ITFM solution and successfully implemented at a number of large and international enterprises across various industries. Recognized by Gartner it provides business leaders with the means to understand and communicate the value of technology investment.
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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.
MagicOrange recognizes the complexity of the overall journey to ITFM maturity. Its 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.