The Role of IT Service Providers in IT Service Management and IT financial Matters
What is The Role of IT Service Providers in IT Service Management and IT financial Matters?
Since personal computers were introduced in the 1980’s, organizations have invested tremendously in information technology. They have done this as a means of improving their delivery of service as well as products quality. Some have also been able to improve their quality of gods and services, while others have failed to do so. For purposes of helping in management of IT challenges among these organizations, service providers of IT are among the major players in the sector. It is this aspect that makes it mandatory for potential IT service providers to study information technology service management. This topic on The Role of IT Service Providers in IT Service Management and IT financial Matters addresses the improvement, initiation, management and organization of IT services which are developed for organizations.
It also seeks to address the provision, support and design of these IT services. This subject comes with variety of topics which range from service lifecycle to the standards of quality. Among these topics, is the one related to financial matters. The topic concerns itself with charging, cost structuring and budgeting matters of IT services (Van and Annemiek 8). Particularly IT financial management concerns itself with the amount, funding control and utilization of money organizations invest in IT. The purpose of this report is to evaluate IT financial matter as one of the topics that IT service providers and management need to study.
Financial IT management broadly deals with the responsibilities and activities that are related to IT and in doing so, covers the financial matters that are related to IT. The topic of IT financial, essentially matters as it deals with the processes of marketing, accounting and charging requirements of IT service provider. The aim of this topic to an IT service provider is ensuring the service provider manages and wisely spends money. This is in line with the purpose of financial management as is the case in other fields of study. Additionally, the topic also ensures the financial resources available align with the organizations business plan. As such, this topic attempts to ensure providers of IT service make investment decisions that are sound and relevant to the organizations objectives. The topic is one that identifies financial risks an IT service provider faces not only now but in the future. In doing so, the topic attempts to ensure IT organizations are able to comply with relevant regulation obligations in terms of financial management.
The fact is a large percentage of organizations have been investing in IT yet, research indicates that most of them have not benefited from the investment. In 2000, a research was conducted by Brynjolfsson which indicated that computerization of majority of organizations does not in any way, improve productivity. The research lead to a productivity paradox (Sottini and Jan 1). However, further analysis into the paradox carried out later indicated that some of these organizations achieved success in boosting operations through IT investment while others did not. This is an indication that though organizations continue to make investment in IT technology, most of them are yet to enjoy the benefits of such investment. As such, for IT organizations that are in the process of maximizing value for services, they are supposed to understand IT financial management. It is through understanding this concept that they can be in the position to provide services that are cost effective to customers.
To understand IT financial management, providers of IT service are supposed to understand the 3 fundamental activities of financial management. First, they need to understand budgeting since it predicts the manner in which an organization is supposed to spend money. In doing so, IT service providers will be in a position to match their business plans with the money available for their services. This can occur within a specified duration which can be 1 year in which case, the organization matches its expected income with the expected expenditure. Nevertheless, a budget is supposed to reflect what the organization could achieve and not what it hopes to achieve. Precisely because of this, it should be a reflection of the proposed projects, service to deliver, investment as well as other premeditated changes (Brewster et al. 52).
Secondly, providers of IT service are supposed to understand the process of accounting. This helps them account for expenditure and income since they are in a position to breakdown their income in accordance to the customers, activities and services. Additionally, it acts as a cost analysis that makes it possible for the service providers to make decisions which are sound. From a general standpoint, accounting aids IT providers in identification of key customers as well as evaluation of the impact they have on organizations. Information, which is gathered in accounting also helps providers of IT service to monitor expenditure and income data which is helpful in evaluation of efficiency of financial controls. The information that is gathered at this stage aids in determining whether IT service providers are supposed to take any action or whether they are not.
Thirdly, IT service providers are supposed to understand the process of charging. This is a process involving strategic decision and IT service providers are supposed to know how to carry it out since it increases the costs of operation. Charging, also influences the manner in which customers behave towards IT service providers. In this instance, customers might compare alternative service providers with what they already have in their organizations.
While reviewing IT financial management as is the case with other topic, it is important to note it is very broad. However, by narrowing it to IT service, it becomes manageable since it is restricted to IT services only. The major goal of the topic is helping IT service providers to account and budget for their costs of service provision. The topic also distinguishes objective of each IT financial management activity as follows. The budgeting objectives are to predict the amount of money that an organization needs in order to run its IT services as well as minimize the tendency of overspending or under spending.
Additionally, budgeting attempts to compare actual spending with predicted spending in order to ensure IT services do not run out of money. The objectives of accounting are an illustration of how an organization spends its money, determines cost of service provision and performs benefit/cost analysis. Lastly, the objectives of charging are aimed at recovering the cost of IT services provision, running the company as a business an influencing the behavior of customers (Sottini and Jan 11).
The topic of IT financial management is of great importance to all IT service providers. It helps them in management of resources in the appropriate manner through ensuring they understand the right manner of running their organizations as businesses. The topic, overall, introduces the notion of spending money wisely and ensuring IT service providers understand why they are supposed to spend money in that manner. I appreciate the role played by the topic among IT service providers.
Unlike other topics, this topics deals with the financial resources. It insists IT organizations are not in any way different from other kinds of organizations. Precisely because of this, the topic maintains IT service providers are supposed to run their organizations as they would businesses. In other terms, the topic attempts to show IT service providers the reason they should account for their money as well as spend it in the appropriate manner.
The topic explores financial resources and attempts to ensure IT service providers use the best practices while handling their resources. The topic also attempts to ensure IT service providers understand operation costs within their organizations, structure costs and factors influencing them. In doing so, the topic ensures IT service providers are able to make best decisions in their business practices.
IT financial matters therefore, are important aspects in IT service management since they deal with specific matters other topics fail to address. As a matter of fact, the topic is unique in its own way (Brewster et al. 52). IT service providers are helped by the topic to compare expenditures with their income in response to their plans and budget. It also identifies potential problems found in IT and analyze appropriate line of action. IT financial matters, essentially help in matters of planning and of making appropriate decisions.
I understand that as a topic, IT management ensures IT service providers are compliant with financial practices for their individual benefit. The topic as well illustrates rationale behind proper financial resources management among IT service providers. In this instance, the topic introduces financial management in its unique form in IT through contrasting it from other disciplines. Therefore, the topic analyzes cost and the manner in which IT service providers are supposed to address costs so they can enjoy success in their practices. Also, the topic analyzes investment and relationship to other aspects in an organization. In doing this, the topic illustrates the manner in which IT service providers are supposed to handle their services as businesses so they can enjoy success.
The following strategy is identified as the strategy that is unique and which IT organizations are supposed to adopt in order to succeed in planning their finances properly. First, the topic claims IT organizations are supposed to engage in proper policy management. In this instance, the topic claims IT organizations need to identify their objectives as well as define clear methods for management of financial matters. Secondly, the topic claims IT organizations need to plan how to use their resources. Planning aids in controlling and predicting process of spending money both in the long and short term. Thirdly, the topic claims IT organizations need to evaluate investments. The purpose of this evaluation is establishing the viability of their initiatives implementation. Fourthly, the topic also claims IT organizations are supposed to engage in pricing of their services. Organizations, at this level can set prices for their IT services (Sottini and Jan 15).
In the last 2 decades, IT technology has continued to change the manner in which organizations operate. Regardless of this fact, an organization cannot survive if it never manages its money and resources effectively. This is true for organizations that provide IT services just as is the case in other organization. For an organization to succeed in business, the organization is supposed to understand financial matters in IT. One way of doing this is understanding the topic of IT financial management. The topic analyzes budgeting and cost in details and the way IT service providers are supposed to address the issue. The topic also maintains that IT service providers are supposed to handle organizations as businesses.
Brewster, Ernest, et al. It Service Management: A Guide for Foundation Exam Candidates. Swindon: British Informatics Society, 2010. Internet resource.
Sottini, Maxime, and Jan Bon. It Financial Management: Best Practice. Zaltbommel: Van Haren Publishing, 2009. Print.
Van, Bon, and Annemiek Veen. Release & Control for It Service Management: Based on Itil : a Practitioner Guide : Configuration Management, Release Management & Change Management. Zaltbommel, Netherlands: Van Haren Pub, 2007. Print.