Cost Transparency and Effective IT Governance
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Overview: During downturns in the business cycle, many CIOs
today are forced to cut capital spending and rein in
costs for running IT. At the same time, they need to be
planning for the recovery. This means CIOs must focus
on cost optimization and competitiveness. In other
words, running IT like a business. Senior management
often sees IT as a black box - and a black hole for
capital outlays - with no real visibility into where the
money goes or how it translates to business value.
At the same time, IT management often views the
company's expectations as unrealistic given the budget
and human resource constraints. Why has it been so
difficult to bridge the gap and deliver true financial
visibility into IT activities? And what can be done about
it now, in the face of continuing pressure on IT budgets
and growing complexity in the IT environment?
This paper provides substantive answers to these questions, with new insights into the underlying issues and a closer examination of the opportunities inherent in effective IT Financial Management (ITFM). The paper summarizes the basic requirements of ITFM, highlights some of the flawed practices that have created problems, presents best practice principles, and finishes with a summary of how the HP ITFM solution can help create a mature and efficient IT organization.