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Chapter 4 ■ Service Strategy
through the night due to month-end activities; the service provider must charge the
customer accordingly. This mechanism of keeping track of what services were offered,
and at what levels, and quantifying them accordingly is one of the key objectives of
financial management of IT services.
Going deeper, I would like to rethink the definition of quantifying the returns to the
customer. In fact, the goal of this process is not only to quantify the money part but also
to quantify the value that the customer generated due to the service. If the customer can
get the visibility due to value quantification, he will be keen on appreciating the service
that is helping his organization rather than believing that IT is a necessary burden that he
needs to learn to live with.
4.8.2.1 Objectives of Financial Management for IT Services
Financial management is a complex process as IT services are measured and charged in
small fragments, including pay as you use. For the scope of ITIL foundation, I will discuss
the high-level objectives of the process. They are:
1. Evaluate financial impact due to new strategies being
conceived of or changing for the existing strategies. For
example, when IBM went from being a product company to a
service organization.
2. Secure funding for developing new services and operating
new services.
3. Budget the expenses for the organization based on the
projected incomes.
4. Account for the money spent on various services, on various
customer-related activities, and other administrative costs.
5. Comply with regulatory and legislative requirements by
carrying out appropriate financial activities.
6. Charge the customers as per contracts and recover costs if any.
4.8.2.2 Scope of Financial Management for IT Services
The entire service provider’s organization comes under the scope of financial
management. Generally, this process is handled separately by a team of finance experts,
accountants, and legal experts with the process rolling up to the chief financial officer
(CFO). For managing IT services, however, you need people who understand the service
landscape, people who can speak the language of services and communicate better.
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