Why did we bother to write this little book? Well, since ITIL is all about best practices and guidelines on datacenter operations there is very little hands on models on how you can actually go about imiplementing it into your organisation. Even less when it comes to the economics of it all. We do not claim to be experts in the field of economics, but then again that is notc what we intend to solve with this book either. We have experience on cost models, tco analysis and datacenter operations. Trying to combine this knowledge with the ITIL guidelines for managing costs is what we hope to do. Only you know if we have at least succeeded in outlining some ideas and aspects of this. Hopefully you have found some pointers on how to do things or perhaps how not to do things. Either way we hope you will take the time to give us some feedback. If you have examples, aproaches and other things that might be of interest here please note it and we will expand the book to include them. We hope to contribute a little to the ever growing awareness of ITIL within the industry.
If you want to contact us you may do so with contact information provided beneath.
| Joergen Skogstad Aasaveien 8b N-0362 Oslo Email: jskogsta@pogostick.net Henning Hogness Beverveien XX N-XXXX Oslo Email: henning@pogostick.net |
No. Within ITIL there are just pointers on how you may solve this at any given company. Litle is said on how you may do this in practical life.
How accounting and budgeting is done varies from country to country.. and even between company to company. There are federal laws and acountinig laws that are in place. Not that all of them applies to what ITIL defines of accounting needs within the IT orgnisation, but these must be kept in mind when implementing ITIL and economics within the it organisation.
Today most organisations does not do their own accounting. The it orgnanisation is part of the overall accountinig done by the finance department. As such, there are some overall planning and budgeting, but there are no constant control of all aspects of the economics involved. The idea ITIL puts on the table is that the it org should be able to be in constant control of all its resources at all given times. Just like any accounting firm. This is virtually impossible without the involvement of finance department.
It is not the idea that the it org should replace the finance dept responsibilities with accounting and budgetinig. However; the it org should complement this. Any large automanufacturer for example have each department manage their own costs.. why should not an it org do the same thing. The it org do support their operations and with the last few 10 years boom in it costs in orgs it is vital to manage this. Without it it is money out the windows.
.. the idea is that an it org should be able to drill down the account plan. With an account plan we mean the attributes that the accounting system has in place to attribute any cost, resource etc. to. Lets say you buy a computer hard drive. This cost should then make it into the accounting system (based on budgets!). The idea is then that the fincance departments official books have this recorded as well as the internal it depts books. This may very well be separate systems (presumably will be if there is no central ERP system with this all integrated).
(here it should be outlined the two models of accounting and budgetinig ... one in which the finance department does it all based on input from the it org ... or the one that the it org does the accounting ... and key numbers are fed into the books in the finance department .. or thirdly when it is done completely separately (not recomnended.. alot of extra work in place)
How the it industry have evolved through the last years. From the low to the highs.. skyrocketing revenues, the internet era, booming stock prices... stock inflation .. the nasdaq ..
.. no companies really had the need to be proactive. They largely made money anyways ... example; sun har 18 consecutive (check this out) quarters with steadily increased revenues and profits (back this up with numbers) ...
.. the ever increasing technology stockmarkets.. how many stock exchanges were created .. why... when and where... back this up with stories and references.
Why was this possible? How was this possible.. Where was the capital coming from etc.
Suddenly the market have dropped. Profits are down .. the world economy is down the drain. People are not investing anymore.. companies are laying off people. Companies are consolidating. The need to reduce cost have suddenly become the number one business priority. How can businesses that have laid of alot of people still save money in the long term? How can this be possible.. this have to be a contradiction??? Well, the only was is through process reengeneering and refinement... and perhaps implementation where it is not in place already.
The techies need to be involved in the everyday business operation just as any other profit and loss center. There are number of reason for this this (some negative aspects also) - the key is delivering `enough` with the scarce resources that are in place. Get rid of dead meat .. remove services that are not needed, cost inieffective etc. Have to look at project based business operation just like any other non-tech-it business.
How is the automotive industry doing? They have been through number of downturns in the market. How can they be `people independant` .. and with reduced number of people still be able to produce at least the same amount of cars (perhaps even more!) with the wanted quality?? Business process reengineering. The it industry have always had it easy. It now seems that reality have hit this industry, but only too fast. It seems that most organisations have seen it coming, but have not been able to react fast enough.
There are misconceptions about the provisioning of it services in todays and yesterdays organisations and businesses. Most of them are developed, run and reinvented/engeneered by the techies from a technial standpoint - only because the economic guys and responsibles involved is not involved in those phases as well as that it people lack (often) the economic business aspect of their services. They tend to want everything now .. whatever the cost. Perhaps an exageration, but it still holds true to some degree. Poinit out a number of examples of this. Why have it become this way? What is wrong with this... how can it be amended? Yes; through the implementation of a process related it operations; preferably using ITIL since it has become the defacto standard for it operation processes.
Sections with documents like;
Include hardware sections with;
Include software sections with;
Help solve the end2end monitoring problems etc.
There should be descriptive information about Capacity Management. Examples of this could be;
Since ITIL gives best guidelines when it comes to cost and how to drive businesses with this in mind, it is vital to do it accounting. This could be done by finance, but the problem that most accounting nowdays are done reactively and by budget. There is no process to ensure proper reporting etc daybyday. This could be done by implementing an it econnomy application with an IT accountplan that is kept up to date. This would need to be done in adition to the already implemented accounting from finance. The reason ITIL would like to have this implemented is to ensure proper management of IT resources at all times. This should be owned by the it organisation, but could very well be done by the finance department.
Book(s) about $$ management for it ops. A practical aproach to IT acounting. Howto and best guidelines from someone in the field.
Certifications/Processes/++;
RACI model;
One important concept is that every organisation should have enough cost control to assess what their assigned headcount cost is. Example:
One major norwegian company is largely project based. All internal resources are constantly assigned internal projects. All projects are managed also based on cost control. All projects have clearly defined ownership and responsibilities. This company have over time built up a database that tells them that regardless of what every person is doing their aditional constant headcount cost is 250 crowns per hour throughout an 8 hour workday. This uplift represents use of the cantina, wear and tear on the buildings, maintenance costs, lease of computer equipment, telephone costs etc. As such; when a person is assigned a project this incurs automatically the persons going rate plus the uplift of 250 crowns per hour. Doing cost analysis based on this then simplifies it all. Doing estimates is alot easier than before since all variables (not 100% accurate though, but good enough to use) are on the table. (This company is Statoil ... we may ask the Statoil representative if he can help us out defining/writing out his example on how they have implemented this at their site???