Thought Leadership & Tools
ITFM Pathway to Success: Step 7 – Benefits Realization
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.
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.
To assess and plan is Step 1 of the framework and it helps businesses leaders review their IT strategic plan, their current and future goals and objectives, and assists them in determining how it aligns with their business strategy.
The next step in the process is to define IT services, to ensure that the charges for these services are transparent and that the business understands them. They then need to ensure high quality service consumption and cost data in order to achieve cost transparency and ultimately, implement showback / chargeback to the business.
Automation of processes is next, it helps increase transparency into service usage and costs to efficiently produce financial and service consumption reports. It will also ensure self-service reporting and data access to customers so that they can understand and regulate their service consumption and costs. Automation will help organizations perform monthly chargeback and bill of IT generation.
Service Costing and Benchmarking is the next step, it’s the process to determine the unit service costs of each IT service being delivered. Unit service costs are required in order to implement chargeback, where each consumer of IT services will be charged for that consumption - based upon the unit service costs and quantity consumed.
Then the important step of chargeback, the process of charging the consumers of IT services for their actual consumption of those services.
Step 7: Benefits Realization
Benefits Realization is the process of measuring if the actual expected benefits and goals were achieved after the ITFM project was completed. Performing benefits realization is not a one-time event, but rather a process that is repeated regularly and should be part of a company’s performance management program.
From a performance management perspective, ‘what gets measured, gets done’ and is applicable for any organization and for any goal, whether it’s IT related or not. When progress against a goal is regularly measured and reported, the chances of achieving that goal are greatly improved. Numerous studies across various industries have confirmed this.
People will embrace being held accountable if they have well defined and realistic goals, coupled with being provided consistent and frequent data showing their performance. This could be as simple as publishing monthly charts generated by Excel or PowerPoint on a bulletin board, showing the relevant data for the specified goals.
Benefits realization is an extension of this process, it is where one focuses on specific IT related goals for improving ITFM capabilities by following the MagicOrange Pathway to Success.
The goals, objectives and benefits were defined as part of Step 1 and should have included improving the IT customer satisfaction scores. An example of a previously identified goal could be to reduce costs by 10% after completion of all steps through #6, which includes automation, service costing and benchmarking, and implementing a chargeback process.
To measure customer satisfaction, one should select key business leaders who use IT services and create no more than five questions for them to answer. The questions should focus on cost, value and quality of service delivery. They should use a five-point rating scale, where 1 is the lowest score and 5 is the highest. 25 points would then be the maximum score for this customer satisfaction survey. One key question should be: “How satisfied are you with the cost of your IT services?”
If possible, the customer satisfaction survey should be conducted face-to-face. This will help build the relationship between IT and the business. However, if face to face is not possible, a second option would be to use an online survey.
The customer satisfaction survey should have been conducted as part of Step 1: Assess and Plan - with the results saved for reference and future use. One would then conduct this same survey with the same questions using the same survey participants. This will help one compare the ratings now that the ITFM improvement project has been completed.
The expectation is that the customer satisfaction scores should have significantly improved. If not, then one should determine why and develop a plan for corrective action.
Ask the Experts
Conducting a benefits realization assessment is another area where having an experienced and trusted partner like MagicOrange is beneficial. Our team can help develop the survey to make sure the right questions are asked, and the right feedback is captured, and then do the analysis to determine if the planned benefits were achieved.
MagicOrange recognizes the complexity of the overall journey to ITFM maturity and its 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.
It’s also helpful to have an impartial third party involved, so that your business feels that their feedback will be captured and reported to senior management. The interviewees will also tend to be more open with their survey responses, since they don’t have to worry about offending anyone in the IT organization with whom they have to see and work with.
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.