IT financial management

At EY, we have seen firsthand how our clients’ needs for digitalizing can lead to a lack of overview. If left unmanaged, costs can spiral out of control as they are caught in a vicious cycle of increasing IT complexity and an increased share of IT solutions (e.g., SaaS solutions) being procured and dispersed throughout the organization. This comes in addition to the technical debt already accrued from legacy IT systems. The diminishing control of IT expenditures has a multitude of potential consequences. 

Absence of data-driven decisions making it increasingly difficult to budget IT costs

As the IT landscape becomes more complex, it becomes increasingly more difficult to understand where costs are generated. This can in turn lead to decisions being made on poor, if not outright wrong, data. In fact, bad data has been estimated to cost most firms an average of 15–25% of their annual revenue (Redman, T. C wrote in his 2017 article: Seizing Opportunity in Data Quality). When the true cost drivers of IT are hidden, accurately forecasting costs becomes a significant challenge. This consecutively decreases the IT budget’s utility as a planning tool, as it becomes reduced to a rough estimate based on aggregated figures rather than accurate cost projections, reflecting the organization’s true cost drivers. 

Value of IT becoming less apparent and weaker alignment of IT and business

When cost transparency decreases, the probability of the IT function being viewed primarily as a cost center increases. CIO Magazine found that roughly half of 722 surveyed IT leaders say their departments are viewed mainly as cost centers by business colleagues (Johnson, M displayed in her 2014 survey: Traditional vs. Digital CIOs: Survey Reveals a Growing Divide). The disassociation between value generation and cost allocation poses a challenge for IT management as it undermines the importance of the IT function to the organization. This significantly impacts the strategic alignment between IT and the business. Without a common language and a similar perception of value generation and cost allocation, the synergy between IT and business strategies suffers. This can have detrimental effects on the outcome of IT investments, as research has established a clear link between the alignment of IT and business strategy, and the payoff from IT investments (Alryalat, M., Adebiaye, R., & Alryalat, H. wrote in their 2017 paper: Maximizing IT Investment Returns: Strategic Alignment of Information Technology towards Corporate Performances).

EY’s framework can utilize multiple technical solutions, ranging from Microsoft Power Platform to more industrialized third party ITFM enterprise solutions, such as Apptio or Nicus Software, depending on organizational needs.

A structured approach to knowledge transfer is fundamental for ensuring that the changes implemented through an ITFM-project are institutionalized in your organization. EY’s approach to knowledge transfer will also improve end-user engagement and accelerated adoption of the new ways of working. EY will ensure the knowledge transfer of ITFM through establishing a digital content hub, which will consist of a variety of customized learning material and innovative training sessions, tailored for your organization’s needs.

Based on the internationally recognized framework for change management, The EY Change Experience, EY’s approach to ITFM ensures a best practice change experience for your organization. This empowers you to successfully navigate through complex, continuous change, and realize the associated benefits.

EY’s Change Experience is delivered through an agile and iterative approach. This supports transformation across the enterprise, adapts to your unique environment, and helps deliver sustainable business value and a superior workforce experience.

Activities:

• Assessment of:​
  • Data quality and structure, and TBM taxonomy alignment​
  • Current tools and allocation models​
  • ITFM capabilities​
• Identify risks and opportunities depending on the current state​
  • Assess whether the existing solution is sufficient to build upon, or if there is a need to migrate / replace the solution
• Understand today’s service catalogue
• Establish a clear understanding of existing data sources, frameworks and cost models (AS-IS)
• Identify requirements for the solution 

Deliverables:

• Current state analysis and gap analysis from desired end-state

Activities:

• Design a cost model according to the desired end-state, including allocation keys, data sources, etc.
• Prepare a development plan
• Ensure that the model and technical solution cover relevant requirements
• Undertake a sign off on the model design
  

Deliverables:

• Future state analysis including:​
  • Key requirements​
  • Cost allocation model design​
  • Recommended options, including expected benefits​
  • Technical implementation roadmap​
• Minimum Viable Product (MVP) of the cost model
• Change and knowledge transfer plan  

Activities:

4A – Development of the model and technical solution

• Identify internal technical resources that will partake in the deployment project​
• Implement and deploy the selected solution​
• Present and anchor the final solution with the steering group​
• Develop a change management roadmap​
  • Including identifying internal change agents​

4B – Knowledge transfer ​

• Develop and deploy a digital hub for ITFM with user manuals, solution documentation and other training material
• Conduct training sessions and ensure knowledge transfer ​
  

Deliverables:

4A – Development of the model and technical solution ​

• Implemented cost model​
  

4B – Knowledge transfer  ​

• Documentation and training material available through a digital hub
• Completed training sessions according to plan​