The purpose of the Financial Management process is to ensure that financial controls and procedures are in place to effectively predict and control IT budgets, enable business decisions, and ensure that legal, corporate and regulatory compliance is maintained. The outputs from the Financial Management process also enable benchmarking and business case analysis to support organizational decision making.

Read the Financial Management Key Concepts.

Important links

• Financial Management Tool Mentors
• Tivoli® Open Process Automation Library Extensions for Financial Management

Outcomes

As a result of the successful implementation of this process:

• IT financial controls are established and enforced
• Operational data is transformed into financial information and management actions
• Compliance is ensured with legal, industry, and corporate standards and procedures
• Benchmarking and other financial comparisons are enabled
• IT portfolio decisions are assisted on investment by providing detailed business cases and by providing financial input to decision support
• IT budgets are effectively predicted and controlled

Scope

IT finance is focused on budgeting, accounting and (optionally) charging for IT resources

Includes

• Budgeting – capital and operational
• Accounting – including accounts receivable (AR) and accounts payable (AP)
• Charging
  • Metering, rating and billing
• Cost models and accounting systems
• Resource types:
  • Labor
  • Products
  • Services (inbound and outbound)
• Decision Support
• Financial analysis and reporting
• Collecting financial data
• Operational data collection requirements for financial purposes
• Design and implementation of accounting systems
• Analysis and control of the impact of chargebacks (influences on user and customer behavior)
• Paying internal and external invoices and bills
• Financial management (depreciation) of assets 

Excludes

• Asset management (including life cycle management)
• Resource usage data collection
  • Systems and services (Service Execution)
  • Time recording and labor claiming (any process, especially Program and Project Management)
• Service, solution, and offering pricing (Service Pricing and Contract Administration)
• Contract management (Service Pricing and Contract Administration)
• Procurement (Supplier Management)

Key performance indicators

• Return on investment
• Percent of projects with business cases
• Percent of IT budget spent on the following
  • Development projects
  • Direct service
  • Functional budgets
  • Areas outside of project, service, and functional budgets
• Purchasing and procurement efficiency indices
• Asset management efficiency index
• Canceled project expense
• The direct costs
  • In this process domain
  • In each process step

Relation to other processes

• Capacity Management is very dependent on costs and uses that information to manage service capacities.
• Configuration Management - Financial Management uses information about the status of existing configuration items to help set service prices.
• Data Management - Data Management costs greatly affect service costs and prices.
• Service Level Management - Financial Management helps set the prices of services and does the general billing and accounting for IT services.

For more information

For more information, see Financial Management in the ITIL® documentation.

In addition, see the IBM® Service Management web page.