When people don't realize how much something truly costs, they generally don't appreciate it.
All too often, that's the case with enterprise IT. Business executives don't understand how much it costs to deliver a particular service. Without that understanding, they typically either assume that IT is a free, infinite resource that can be called upon to do anything, or at the other extreme think that everybody outside of the internal IT department can deliver services more cost-effectively.
The challenge facing most IT leaders is finding a way to quantify the cost of delivering IT services to drive a specific business process. This ability to "showback" is especially critical now in this era of cloud computing, when every business executive seems to think they can call up and have any service they want regardless of what the internal IT organization has to say about it.
But if an IT organization is ever going to be able to show the true cost of delivering a particular IT service, they are going to need something more sophisticated than a spreadsheet. That's the thinking behind a software-as-a-service application designed specifically for IT financial management from Apptio, which today added a new demand-based forecasting module to its service.
According to Jeff Day, director of marketing for Apptio, the new module allows IT organizations to model usage patterns to determine future requirements to keep pace with the demands of the business based on actual previous usage. This tool, says Day, is not only critical in terms of showing actual IT usage, it can also be used as the foundation for charging business units for actual IT usage.
The ability to chargeback for IT usage varies depending on the financial structure of a given company. But whether it's to chargeback or showback, IT organizations need to give the business side more transparency to the cost of IT. A well-run internal IT organization should be able to prove that it's more cost-effective at delivering specific types of IT services than a third-party provider. If it isn't, then the internal IT organization needs to step aside and find another place to add value. But an internal IT organization isn't likely to know where that place is unless they have some financial metrics to work with.
Internal IT organizations are under more financial pressure than ever, a fact that is likely to never go away. Unless they arm themselves with the right IT financial management information to do battle to win the business of their internal customers, chances are the battle will be lost before the meeting to discuss IT strategy ever gets started.