A Tactical Financial Management & Business solutions
[for IT Startups using ITIL V3 practices]
Author: Shanthi Kumar V, IT...
Overview with Questions
Typical Questions:
➲ Did you define the financial framework of the organization
on how to operate?...
Overview
➲ Questions are Continued from previous slide...
➲ Do you have the mechanism to adopt and apply the
company polic...
Overview – Financial management
for IT
As per the ITIL definition:
➲ The financial management function and the processes
r...
Scenarios for inadequate and adequate financial
management
Let us assume a scenario; the startup company wants to implemen...
A Practical scenario on
Financial planning
Note: In the mext slide you can see the Example/scenario on scope
of IT Financi...
Financial operations and internal strategy
➲ Let us see how the internal financial team operations should
happen with A sc...
Recommendation
Continued Conclusion on internal Strategy:
➲ It can create the environment or culture to own
responsibility...
What is Budgeting in financial
management?
➲ The budgeting is a process for predicting and controlling the
income and expe...
Example/Scenario for IT Budgeting
Continued Example/Scenario:
➲ By doing a monthly monitoring the manager can have
control...
Example/Scenario for IT Budgeting
Continued Example/Scenario:
➲ Please note due to lack of these plans and controls many I...
Note: In the next slide you can see an example or scenario on Accounting for IT
company
This document is a partial preview...
What is charging in financial management?
➲ Using this process it can be billed to customers for the use of
the IT service...
IT services companies Horizontals and verticals
internal business operations
Note: In the next slide you can see A Chargin...
What is reporting in financial
management?
➲ As we have been observing from previous definitions, all the
financial data i...
What is reporting in financial
management?
➲ Using the financial reports, all the role based people who all are
from diffe...
What are the sub-processes of financial
management?
The financial management has the below sub-processes as
per the ITIL V...
Sub-processes of financial management
Financial analysis and reporting:
This process can support in analyzing the structur...
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Tactical Financial Management & Business Solutions (for IT Startups using ITIL V3)

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1. I have prepared this document to support the small size to mid size IT companies to have a structured plan in managing their financial planning, tracking budgeting/accounting/charging and management.

2. I have taken the definitions from the ITIL Financial processes and sub-processes.

3. I have made several graphical diagrams to illustrate or denote the definitions easily.

4. It has several live examples/scenarios after each Process or sub-process definitions. These examples are made from my live experiences from different IT services operations.

5. With these examples, anybody can start practicing them for their live operations from day one.

6. It can also be a guideline or solutions document for a startup IT Companies with reference to their business organization and towards planning and managing their Financial side also.

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Tactical Financial Management & Business Solutions (for IT Startups using ITIL V3)

  1. 1. A Tactical Financial Management & Business solutions [for IT Startups using ITIL V3 practices] Author: Shanthi Kumar V, IT Management consultant Contact: vskumar35@gmail.com
  2. 2. Overview with Questions Typical Questions: ➲ Did you define the financial framework of the organization on how to operate? ➲ Using this framework, Can the service provider identify, manage, and communicate the actual cost of the service delivery? ➲ Is this framework helps in understanding the changed or new service or with the latest organizational strategies impact or implications? ➲ Do you have a structured plan to secure the funds during the IT services providing? Note: Questions are Continued in next slide also. This document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/tactical-financial-management-and-business-solutions-for-it-startups-using-itil-v3-822
  3. 3. Overview ➲ Questions are Continued from previous slide... ➲ Do you have the mechanism to adopt and apply the company policies and practices related to financial controls? ➲ Do you have mechanism to understand the future financial requirements of the organization? ➲ Do you have the mechanism for providing the financial forecasting and budgeting? Note: You can see the lack of Financial Management practices in a graphical chart in the next slide. This document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/tactical-financial-management-and-business-solutions-for-it-startups-using-itil-v3-822
  4. 4. Overview – Financial management for IT As per the ITIL definition: ➲ The financial management function and the processes responsible for managing an IT service provider’s budgeting, accounting and charging requirements. ➲ Financial management for IT services secures an appropriate level of funding to design, develop, and deliver services that meet the strategy of the organization in a cost effective manner. Note: With the above definitions I have developed a chart to remember the attributes.You can see it in next slide. This document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/tactical-financial-management-and-business-solutions-for-it-startups-using-itil-v3-822
  5. 5. Scenarios for inadequate and adequate financial management Let us assume a scenario; the startup company wants to implement the automation of the following: Incident management, Asset management, Help desk management, Accounting, payroll and HR process. To complete these applications, we need to have a) People, b) Software, c) Hardware and d) Support from the management. The financial management team needs to measure their cost, budget them for approval and project the outcome. The reasonable profits or cost savings by using these applications need to be estimated for ROI. Note: Next slide talks on how to plan with and without financial planning. This document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/tactical-financial-management-and-business-solutions-for-it-startups-using-itil-v3-822
  6. 6. A Practical scenario on Financial planning Note: In the mext slide you can see the Example/scenario on scope of IT Financial management. This document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/tactical-financial-management-and-business-solutions-for-it-startups-using-itil-v3-822
  7. 7. Financial operations and internal strategy ➲ Let us see how the internal financial team operations should happen with A scenario. Example/Scenario: ➲ In most of the large IT organizations, there are qualified accountants in charge of corporate finances. ➲ And they will be part of the finance department. ➲ They will have capabilities in setting up the financial policies, standards, and accounting practices for the business. Note: In the next slide you can see the continuation of this example/scenario This document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/tactical-financial-management-and-business-solutions-for-it-startups-using-itil-v3-822
  8. 8. Recommendation Continued Conclusion on internal Strategy: ➲ It can create the environment or culture to own responsibility on introducing the IT services with reduced cost and reasonable ROI to any unit. ➲ By using the service level management approach, one can get an idea and responsibility to deliver the services by understanding ‘the accounting for IT services is more effective, detailed, and efficient’. Note: In the coming slides you can see the sub-processes useful in financial management of an IT company with examples or scenarios. This document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/tactical-financial-management-and-business-solutions-for-it-startups-using-itil-v3-822
  9. 9. What is Budgeting in financial management? ➲ The budgeting is a process for predicting and controlling the income and expenditure of money of an organization. ➲ Budgeting consists of a periodic cycle. ➲ The cycle can facilitate to negotiate to set the budgets and regular or monthly monitoring of the same. ➲ The usual cycle can be yearly. ➲ On special cases it can be half year or quarterly. ➲ If it is a startup company it is better to have a quarterly budgeting. With this mechanism they will come to know Profit and loss in a quarter. And the required improvement areas can be identified to strengthen the company financially and its business. Note: In the next 2 slides you can see the example of; IT company on Budgeting. This document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/tactical-financial-management-and-business-solutions-for-it-startups-using-itil-v3-822
  10. 10. Example/Scenario for IT Budgeting Continued Example/Scenario: ➲ By doing a monthly monitoring the manager can have control on the costing. ➲ The finance management team can have periodical reviews on the running cost and the predicted cost to find the ROI. ➲ Let us assume one payroll application need to be designed for internal use. ➲ The estimated budget can be USD 60,000 for 6 months duration. Note: In the next slide you can see the continuation of examples or scenarios on budgeting. This document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/tactical-financial-management-and-business-solutions-for-it-startups-using-itil-v3-822
  11. 11. Example/Scenario for IT Budgeting Continued Example/Scenario: ➲ Please note due to lack of these plans and controls many IT projects have been failing and ultimately it can lead to the name of as bad resourcing or operation. ➲ In this case one can find the real reasons. ➲ And such plans or controls are not being enforced by either party [IT & Finance teams]; it is vulnerable to consider such projects. Note: In the next slide you can see the Accounting. This document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/tactical-financial-management-and-business-solutions-for-it-startups-using-itil-v3-822
  12. 12. Note: In the next slide you can see an example or scenario on Accounting for IT company This document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/tactical-financial-management-and-business-solutions-for-it-startups-using-itil-v3-822
  13. 13. What is charging in financial management? ➲ Using this process it can be billed to customers for the use of the IT services. ➲ This will be applicable on the instances where the organizational accounting model requires to take place. ➲ It definitely, requires sound accounting practices. There should be supporting systems to track the cross charging and its accuracy. ➲ Processes automation is recommended for easy tracking. Note: In the next slide you can see in chart on typical Charging areas and reasons. This document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/tactical-financial-management-and-business-solutions-for-it-startups-using-itil-v3-822
  14. 14. IT services companies Horizontals and verticals internal business operations Note: In the next slide you can see A Charging scenario within an IT Company. This document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/tactical-financial-management-and-business-solutions-for-it-startups-using-itil-v3-822
  15. 15. What is reporting in financial management? ➲ As we have been observing from previous definitions, all the financial data is business critical for a company. ➲ All these sub-functions like; forecasting or budgeting, accounting, charging, invoicing need to be integrated for easy managing and tracking by different teams. ➲ By using these applications any timely reports can be obtained from top management to low level people. ➲ Issues tracking can be made easy with accuracy of the calculations. Note: In the next slide you can see the continuation on reporting of financial management within an IT Company. This document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/tactical-financial-management-and-business-solutions-for-it-startups-using-itil-v3-822
  16. 16. What is reporting in financial management? ➲ Using the financial reports, all the role based people who all are from different departments involved can understand them very clearly rather than with the excel sheets. ➲ The internal departments also can estimate their revenues for their OLAs[Operational Level Agreements]. ➲ At the same time, if the business units are having the resources project work hours time entry systems, the billability tracking can be made easier on weekly basis. ➲ So that the accountants can have revenue forecasting also for senior management’s presentation on the company’s performance. Note: In the next slide you can see the Dos and Donts of financial management. This document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/tactical-financial-management-and-business-solutions-for-it-startups-using-itil-v3-822
  17. 17. What are the sub-processes of financial management? The financial management has the below sub-processes as per the ITIL V3 practices. ➲ Financial management support ➲ Financial planning ➲ Financial analysis and reporting ➲ Service invoicing ➲ The importance of a Business case Note: In the next slide you can see the sub-processes of financial management in a graphical chart. This document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/tactical-financial-management-and-business-solutions-for-it-startups-using-itil-v3-822
  18. 18. Sub-processes of financial management Financial analysis and reporting: This process can support in analyzing the structure of service provisioning cost and the profitability of the services. The financial analysis allows the service portfolio management to make their informed decisions, when they decide to implement the changes to the service portfolio. Using this practice the estimated P&L [Profit and Loss] measurement also can be forecasted. Note: In the next slide you can see the definitions for sub-processes of financial management. This document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/tactical-financial-management-and-business-solutions-for-it-startups-using-itil-v3-822
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