SaaS-delivered IT financial management from Service-now.com

The Spring (June) 2010 Service-now.com release adds much-anticipated IT financial management capabilities to its SaaS-delivered IT service management tool. The release will be applied to customer instances on 4 June, and is considered by Service-now.com to be the most substantial in its relatively short history. It contains six new applications that deliver capabilities for service portfolio management; IT cost management; project and portfolio management; field services; HR management; and facilities management. In our opinion, the additional financially based ITIL v3 service strategy processes of IT financial management and service portfolio management are both key enablers in the preparation required of IT organizations when considering the opportunities in the cloud.

IT organizations have long needed technology to enable IT financial management

For many IT organizations, the art of finance is pretty much a foreign language, with IT people not really understanding finance – in the same way that finance people often don’t understand HR, or HR people don’t understand marketing. Most IT organisations are able to budget and account for IT expenditure, but how many understand IT service costing – getting “under the skin” of IT services to determine the resources they consume and how cost drivers impact the overall cost of service provision?

A common barrier to effective IT financial management has been the lack of understanding of finance as a discipline within IT, because of both the “language” issue and the lack of comprehension of the “detail” of accounting practices. Beyond this though, there has long been a need for fit-for-purpose technology to enable IT financial management, in order to both support and guide the financial disciplines required within corporate IT organizations. This technology needs to help make IT financial management easier.

While many on-premise IT service management vendor tools have had IT financial management capabilities for several years, we believe the addition of these capabilities to Service-now.com’s SaaS for IT service automation offering is a sign of both the ever-growing need for IT financial management and the continuing suitability of SaaS-delivered IT service management for enterprise-level organizations. The addition of IT financial management capabilities (along with the other five applications) further increases the attractiveness of Service-now.com’s offering in the enterprise IT service management space.

IT financial management will be key to cloud migration decision making

Cloud computing is changing the way that IT organizations look at, and will eventually deliver, IT services. However, it is not going to be a total solution for IT service delivery, with most organizations eventually operating a blend of IT services delivered on-premise and via the cloud. Enterprises should apply cloud only to those areas where in-house IT is failing, rather than seeking to apply it (unjustifiably) to areas where in-house IT is already adequate and cost-effective.

In order to figure out which IT assets to keep and manage within a private cloud, which to trust to a traditional IT service provider, and which to source from the various public cloud solutions on offer, IT organizations need to understand what they already have and where they want to go. This is a comprehensive exercise that will need to leverage existing (or quickly assembled) IT service management knowledge and resources.

An IT organization clearly needs to have a good understanding of the IT services it provides (service portfolio management and service catalog management), along with the service-delivery quality levels required and the service-level agreement targets agreed with the business. One area where many IT organizations will struggle is service costing, and an IT organization needs to ensure that like is compared with like financially when making decisions around the cloud. It is necessary to understand what service delivery currently costs, that the price paid per month is not likely to be the total cost of ownership (TCO) for cloud-delivered IT services, and that the removal of some on-premise-delivered IT services might adversely affect the cost of those that remain.

Originally published at http://www.ovum.com/news/euronews.asp?id=8671

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