Traditional ROI won’t necessarily help you make an airtight case when you are considering an automated solution for improving your IT financial management practices. Consider using a modified ROI approach.
Determining the ROI of investing in an IT financial management solution can be tricky. Traditional approaches to ROI generally only consider what are commonly called “hard” expenses and benefits. Given the traditional approach you would only want to consider how the implementation of an IT financial management solution would impact your ability to reduce the cost of producing similar results without a solution. This approach essentially translates into a substitution of automation for labor type of analysis.
There are a couple of significant drawbacks with this approach. The first is that most enterprises are hugely under invested in their IT financial management practices and thus have little idea of what it would take to manually produce a result they would find satisfying. The second is that the primary benefits derived from the implementation of an IT financial management solution are not related to the reduction in the effort to manage the process. Rather, the primary benefits are derived from the value of the information itself. The implementation of a solution in effect improves the ability of IT to collaborate effectively and efficiently with the lines of business they serve.
The result (or benefit) of this enhanced collaboration is improved decision making around the investments that IT makes on behalf of the business.
For example, an automated solution can dramatically improve your ability to do “what-if” planning across your entire service portfolio, allowing you to consider the impact of alternative investments scenarios before choosing any. The ability to leverage comparative benchmarks is a great way to find cost optimization opportunities that allow you to lower the cost of IT without impacting the quality of the services delivered. In most large and complex organizations, doing this kind of work without an automated solution would require not only the use of a large number of internal resources but also the use of many external consultants. Given this, most organizations won’t build this capability and thus never realize this level of benefit without an automated solution.
The whitepaper, The IT Financial Management Challenge: Where is the ROI? looks at the problem of traditional ROIs and lays out a path for creating a modified ROI that appropriately considers what are generally considered “soft” benefits. The soft benefits accrue from the ability to more effectively manage the costs associated with three key areas of IT investment:
- Infrastructure Hardware and Software
- Application Development and Maintenance
- Third-Party Software and Vendor Management
You can use the framework in this whitepaper to better understand how to approach the challenge of coming up with an ROI for an investment in this space that actually makes sense. While developing an ROI for an IT financial management solution can be challenging, it can be done. You just need to understand what it is you are trying to achieve and then adopt an approach to measurement that matches this.
To learn more about how VMware IT Business Management can provide transparency and control over the costs and quality of IT services and enable you to better align IT with business priorities visit us online.
Need help addressing your IT service costing and quality management initiative? Contact us and our experts can help your team build the business case and the solution that will maximize your IT productivity.
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