This document discusses how to translate IT costs and activities into financial terms that are understandable to business stakeholders. It provides examples of different types of IT cost reporting and cost allocation methods. It emphasizes the importance of linking cost data to services, applications, and other business elements. The document also outlines best practices for designing cost models, socializing the models with stakeholders, and operationalizing an ongoing service costing process.
An IT Financial Analyst needs a special set of skills. One of our consultants, Mike Serber, recently presented one way of finding them at the ITFMA conference in Atlanta
Slides from TFMA conference- April 2016 in Chicago.
Important considerations and metrics to leverage when deciding if you are ready to implement a consumption based model and ITFM process.
Thavron service portfolioforitfm-an_itfma_workshop_norfolk_2014_04Thavron Solutions
Workshop Guide slides from our April 2014 session at the ITFMA conference in Norfolk: The IT Service Portfolio- an introduction to the Service Portfolio as Investment and how to measure value.
An IT Financial Analyst needs a special set of skills. One of our consultants, Mike Serber, recently presented one way of finding them at the ITFMA conference in Atlanta
Slides from TFMA conference- April 2016 in Chicago.
Important considerations and metrics to leverage when deciding if you are ready to implement a consumption based model and ITFM process.
Thavron service portfolioforitfm-an_itfma_workshop_norfolk_2014_04Thavron Solutions
Workshop Guide slides from our April 2014 session at the ITFMA conference in Norfolk: The IT Service Portfolio- an introduction to the Service Portfolio as Investment and how to measure value.
Lag. Crackle. Pause. Keeping Your Unified Communications in Check.Zenoss
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When problems arise — instant messaging outages, video or desktop sharing freezes, VOIP calls affected by jitter, etc. — organizations often grind to a halt as IT teams seek to restore capabilities.
UC Insight with Log Analytics provides end-to-end IT monitoring across not only heterogeneous Unified Communications applications and systems, but infrastructure as well, delivering detailed call path analysis and Quality of Service readouts for all UC devices and tools.
This webinar will dive into unified and progressive techniques for monitoring, streamlining and enhancing the output of your Unified Communications applications and systems.
The term cloud computing is being used more and more, but what is it and why should you understand it? In this free webinar we will explain what cloud computing means, define the different types, discuss how it is impacting nonprofits and libraries, and outline some criteria for use. The challenges of using the “cloud” will be discussed, as well as whether cloud computing will simplify your life and reduce software and IT staffing costs.
Hear from Anna Jaeger, Co-Director, GreenTech at TechSoup Global, and Peter Campbell, Nonprofit Technologist at Earthjustice, who will help you understand this topic in order to better communicate with your consultants, staff and board. This webinar is applicable for any size organization and ideal for decision makers who need to communicate about cloud computing with tech consultants, and who are interested in making more informed technology decisions.
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In this presentation, CompTIA’s own Dr. James Stanger interviews Bob Marlatt, information systems operations manager for the Washington State Patrol. Marlatt has worked in IT for two decades, both as a consultant and IT manager. His current responsibilities include managing the IT infrastructure for law enforcement in Washington State. You’ll learn more about how he helps ensure system uptime and how his systems make it possible for law enforcement to share vital information in real-time. He’ll also share some of the tips, tricks and traps for supporting evolving IT systems that can have an impact in your business.
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One reviewer says, "Anything you can do on a computer with enough effort, you can get the robot to do it," and another: "There's a 100% reduction in human errors. The bot doesn't make any errors."
Framatome ANP, an AREVA and Siemens company, is a world leader in its businesses:
engineering, design and construction of nuclear power plants, nuclear services, fuel assemblies and heavy component manufacture. When they decided to transfer the management of their IT systems to a service provider, the challenge faced by the IT Department was to guarantee the success of outsourcing, and to implement working methods and systems appropriate to the new contractual framework. Read how CAST became their solution for outsourcing management.
Every Service Costing Model Has to change at some point. When and How to rationalize and socialize those changes are important points to consider before the project gets started
Workshop Guide slides from the Atlanta ITFMA conference- Presented July 13, 2015.
How to assess your data readiness for Service Costing/TCO activities.
Note, the second half of the workshop was in spreadsheets note included here. Please contact us for more information or templates.
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Unified Communications enables multiple communications options (instant messaging, email, voice and video conferencing) to share a common network, and provides users with a richly integrated ecosystem where contact and content are seamlessly shared. UC is often the center of an IT infrastructure making it essential to have a unified IT monitoring solution in place to reduce outages and predict overloads.
When problems arise — instant messaging outages, video or desktop sharing freezes, VOIP calls affected by jitter, etc. — organizations often grind to a halt as IT teams seek to restore capabilities.
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The term cloud computing is being used more and more, but what is it and why should you understand it? In this free webinar we will explain what cloud computing means, define the different types, discuss how it is impacting nonprofits and libraries, and outline some criteria for use. The challenges of using the “cloud” will be discussed, as well as whether cloud computing will simplify your life and reduce software and IT staffing costs.
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Note, the second half of the workshop was in spreadsheets note included here. Please contact us for more information or templates.
Traditionally, the CIO and their staff have owned the "care and feeding" of a company's ERP on behalf of the business. The implementation process for the business is very detailed, but the implementation process for IT has been focused on the Technical. with the Shift to "Running IT Like a Business", the CIO and staff are now also consumers of the ERP and need to focus not only on the technical aspects of the implementation, but also self reflect on the IT Business Process impacts as well.
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Thavron: Service Costing for the Board Room to Finance
1. Translating IT to Finance Language
Allocations and Reporting Service Costing
How to keep everyone happy without pulling your
hair out……
ITFMA Spring 2016 Chicago
Copyright 2016 Thavron Solutions, LLC
2. Types of Reporting
• Financial by Cost Type
• Opex/CapEx
• Scenario
• Run/Grow/Transform
• Build/Run
• The Things that IT/Technology does
• Application TCO
• The Things that the Business Consumes
• Business Unit allocations
• Location
• By Headcount
• By Company/Division
• Etc….
Copyright 2016 Thavron Solutions, LLC
3. Data Structure and Design hold the Key
It is all about Linkages….
Copyright 2016 Thavron Solutions, LLC
4. Data Structure and Design hold the Key
Copyright 2016 Thavron Solutions, LLC
It is all about Linkages….
…………….. And meta data
5. Design Linkages & Meta Tags before you start to build…
Copyright 2016 Thavron Solutions, LLC
6. It all starts with Financial Data
Depreciation/
Amortization
Hardware
Expense
Software
Expense
Maintenance Labor Other
Facilities/Power Outside Services G&A
Copyright 2016 Thavron Solutions, LLC
7. High Level Cost Model Hierarchy
Business Unit
Business Service
Applications/Projects/TCO
Things IT Does
Copyright 2016 Thavron Solutions, LLC
8. High Level Cost Model Hierarchy
Business Unit
Business Service
Applications/Projects/TCO
Things IT Does
Copyright 2016 Thavron Solutions, LLC
9. The Things that IT/Technology Does
Copyright 2016 Thavron Solutions, LLC
Application Development
Support & OPS
LoB Software
Cloud Apps
Storage
Tier 1-4
Cloud
Cloud Archive
Remote Backup
End User
Mobile Device
Workspace
Deskside Support
Communication
Circuits
Usage
Network
Lan
Wan
Voice
Other Network
Cloud Network
Data Center
Enterprise
Other Facilities
Security & Compliance
Security Policy
Compliance
Disaster Recovery
Compute
Windows
Linux
Mainframe
Database
Delivery
Proj Mgt
Client Mgt
Ops Center
Cloud Ops
10. Cost Drivers: Network
Depreciation: Per
Asset/Spread to
Port
Hardware:
Per Asset/Spread
to Port
Software:
Per Site/Spread to
Ports
Maintenance:
Per Site/Spread to
Ports
Labor:
Per Site/Spread to
Ports
Other:
Spread to Port
Unit Cost:
Per Port or Per
Site
Copyright 2016 Thavron Solutions, LLC
11. Cost Drivers : Security & Compliance
Depreciation:
N/A
Hardware:
Per Asset/Site -
Spread
Software:
Per license/Site-
Spread
Maintenance:
Per license/Site-
Spread
Labor:
Total - Spread
Other:
Total- Spread
Spread over all
services
Copyright 2016 Thavron Solutions, LLC
12. Cost Drivers : Data Center
Depreciation:
Per Site/Per
Asset - Spread
Hardware:
Per Site/Per
Asset - Spread
Software:
Total or Per Site-
Spread
Maintenance:
Total or Per Site-
Spread
Labor:
Total or Per Site
- Spread
Other:
Total or Per Site-
spread
Cost per R/U,
Cost per Site
Copyright 2016 Thavron Solutions, LLC
13. Cost Drivers : Communication
Bandwidth:
Total per
Connection/Site
Depreciation:
N/A
Hardware: N/A
Software:
Total or Per Site
Maintenance:
Total or Per Site
Labor:
Total or Per Site
Other:
Total or Per Site
Percentage
split to DC and
Sites
Copyright 2016 Thavron Solutions, LLC
14. Cost Drivers : Storage
Depreciation:
Assigned to
appropriate
hardware-
Hardware: Per asset
Spread over class of
hardware by usage
Software: total or by
Platform
Spread over class of
hardware
Maintenance: total
or by Platform
Spread over class of
hardware
Labor: total spread
Per class of hardware
supporting/by Tier
Other:
Total- Spread Evenly
Unit Cost per
Tier or Platform
Copyright 2016 Thavron Solutions, LLC
15. Cost Drivers : Compute
Depreciation:
Assigned to
appropriate
hardware
Hardware: Per Asset-
Spread over class of
hardware
Software: Total per
OS or Class
Spread over class of
hardware
Maintenance: Total
per OS or Class
Spread over class of
hardware
Labor: Total
Per class of hardware
supporting
Other:
Total Spread
Unit Cost per
Class of logical
instance ( Virtual
Wintel Instance,
Physical Solaris
Instance, etc..)
Copyright 2016 Thavron Solutions, LLC
16. Cost Drivers : Application Development
Depreciation:
N/A
Hardware:
N/A
Software:
Spread unless application
specific
Maintenance:
Software Maintenance
Costs Spread unless
application specific
Labor:
Total Per Activity Group,
spread to Application
Type or Family
Other:
Total Spread
Cost per
Application
impacted, cost
per Application
Family or Type
Copyright 2016 Thavron Solutions, LLC
17. Cost Drivers : Delivery
Depreciation:
N/A
Hardware:
N/A
Software:
Spread or per Activity
Group
Maintenance:
Software Maintenance
Costs Spread or Per
Activity Group
Labor:
Spread or per Activity
Group
Other:
Total Spread
Cost per
Activity Group
Copyright 2016 Thavron Solutions, LLC
18. Cost Drivers : End User
Depreciation:
To Appropriate
Hardware Class
Hardware:
To Appropriate
Hardware Class
Software:
Spread across
Hardware Class
Maintenance:
Spread across
Hardware Class
Labor:
Per Activity
Group
Other:
Total Spread
Cost per
delivery unit,
Cost per class
of Hardware
Copyright 2016 Thavron Solutions, LLC
19. PC Service Cost Modeling
Copyright 2016 Thavron Solutions, LLC
GL Account
6879099
GL Account
6879123
GL Account
6879224
Service Desk
OnSite
Support
PCs
PCXX23
PCXX34
PCXX45
PCXX56
PCXX67
20. PC Service Cost Modeling
Copyright 2016 Thavron Solutions, LLC
Labor
Software
Hardware
Service Desk
OnSite
Support
PCs
PCXX23
PCXX34
PCXX45
PCXX56
PCXX67
21. PC Service Cost Modeling
Copyright 2016 Thavron Solutions, LLC
Labor
Software
Hardware
Service Desk
OnSite
Support
PCs
PCXX23
PCXX34
PCXX45
PCXX56
PCXX67
1: 1 per PC
22. PC Service Cost Modeling
Copyright 2016 Thavron Solutions, LLC
Labor
Software
Hardware
Service Desk
OnSite
Support
PCs
PCXX23
PCXX34
PCXX45
PCXX56
PCXX67
1: every up to 10 PCs
23. PC Service Cost Modeling
Copyright 2016 Thavron Solutions, LLC
Labor
Software
Hardware
Service Desk
OnSite
Support
PCs
PCXX23
PCXX34
PCXX45
PCXX56
PCXX67
Tickets of type “PC” spread evenly
24. Here is what the customer is expecting….
Copyright 2016 Thavron Solutions, LLC
$750/month
25. Here is what the customer is expecting….
Copyright 2016 Thavron Solutions, LLC
$600/month
26. So when this happens…...
Copyright 2016 Thavron Solutions, LLC
$750/month
27. And then this happens.….
Copyright 2016 Thavron Solutions, LLC
$650/month
28. PC Service Cost Modeling
Copyright 2016 Thavron Solutions, LLC
Labor
Software
Hardware
Service Desk
OnSite
Support
PCs
PCXX23
PCXX34
PCXX45
PCXX56
PCXX67
1: every up to 10 PCs
29. Or This Can happen……
Copyright 2016 Thavron Solutions, LLC
Joe’s Windows Server : $400/month
Sue’s Windows Server : $400/month
Pat’s Windows Server : $400/month
30. Or This Can happen……
Copyright 2016 Thavron Solutions, LLC
Joe’s Windows Server : $600/month
Pat’s Windows Server : $600/month
31. TCO Service Costing:
Copyright 2016 Thavron Solutions, LLC
Facilities
Labor
Hardware
DataCenter
Storage
Server
hardware
SoftwareSoftware
Physical
Server TCO
Virtual
Server:
AAJoe123
AASue225
AAPat334$1200
$400/each
32. TCO Service Costing:
Copyright 2016 Thavron Solutions, LLC
Facilities
Labor
Hardware
DataCenter
Storage
Server
hardware
SoftwareSoftware
Physical
Server TCO
Virtual
Server:
AAJoe123
AAPat334$1200
$600/each
33. High Level Cost Model Hierarchy
Business Unit
Business Service
Applications/Projects/TCO
Things IT Does
Copyright 2016 Thavron Solutions, LLC
34. Putting the pieces together…
Copyright 2016 Thavron Solutions, LLC
Type of TCO Critical Linkage
Application • Application to Logical Server
• Logical Server to Storage
• Development Time to
Application
• Server and Storage to
Datacenter
• Software to Application
• Software Maint to Application
• Databases to Application
• Support Tickets to Application
35. Putting the pieces together…
Copyright 2016 Thavron Solutions, LLC
Type of TCO Critical Linkage
Logical Server Class • Logical Server to Physical
Server Clusters ( if virtual)
• Depreciation per class
• Storage to Server Class
• Software to Server Class
• Build and Support labor per
Server Class
• Hardware Maint to Server Class
• Datacenter for Server Class
• Network per Server Class
36. High Level Cost Model Hierarchy
Business Unit
Business Service
Applications/Projects/TCO
Things IT Does
Copyright 2016 Thavron Solutions, LLC
37. What’s in a name?
Copyright 2016 Thavron Solutions, LLC
Business Services are where the
conversation between IT and the
Business is framed.
Services should be defined so they
are descriptive to the usage and
not to the technology
38. Business Services
Copyright 2016 Thavron Solutions, LLC
Client Computing
Basic Workspace
Technical Workspace
Shared Workspace
Traveling Workspace
Copy/Print/Fax/Scan
Desk Side Support
Connectivity
Network Access
Remote Access
Comm & Collab
Conferencing
Collab Workspace
Messaging
Email
Phone & Voicemail
Line of Business
Strategy & Plan
Design & Build
Market & Sell
Take Orders
Deliver Products
Service Customer
Mgmt & Support
Finance
HR
Legal
Facilities
Communications
Prof Services
Prog & Proj Mngt
Bus Process Mngt
Ent Architecture
Hosting
App Hosting
PaaS
DBaaS
CaaS
SaaS
App & Integration
App Design & Dev
App Support
Quality Assurance
39. High Level Cost Model Hierarchy
Business Unit
Business Service
Applications/Projects/TCO
Things IT Does
Copyright 2016 Thavron Solutions, LLC
40. Recipe for Service Success
• To Succeed you must:
– Know who your customers are
– Know what your customers goals are
• And enable them to complete them without being a burden
– Know what your customers problems are
• And solve them seamlessly
Copyright 2016 Thavron Solutions, LLC
41. Exposing Actual Costs to Consumers is Dangerous
• Not all Cost components are on a 1:1 ratio
• Unit rates are the most important number for a consumer
• If you are doing show back or charge back, calculate the
Consumer cost based on a fixed unit rate- not on actual costs.
• Variance is for INTERNAL IT “run the business” decisions- not
for exposure to the external consumer.
Copyright 2016 Thavron Solutions, LLC
42. A little on the planning and process…..
Copyright 2016 Thavron Solutions, LLC
43. Preparing for the Service Costing process
• Documented Use Cases for the system
• Test Cases for model and reports
• Validate both the model logic and the outcomes
• Have a plan and know what can be validated outside of the
system
• Socialization with the consumers
Copyright 2016 Thavron Solutions, LLC
44. Socialization
• Communication Plan
• Communicate
• Share the end tie outs – no need to drag everyone through the
mud
Copyright 2016 Thavron Solutions, LLC
45. Operationalizing Service Costing
• Regular governance processes
– Fallout
– Unexpected changes in source data
– Technical failure
– Include some feedback /corrective
mechanism
Copyright 2016 Thavron Solutions, LLC
46. Hardware
Capital
Expense
Maintenance
Software
License
Maintenance
Labor
External
Internal Capital
Internal Expense
Services
Vendor
Cloud
Other
Gen Admin
Miscellaneous
Travel
Telecom
Network
Voice
Application
Development
Support & OPS
LoB Software
Cloud Apps
Storage
Tier 1-4
Cloud
Cloud Archive
End User
Mobile Device
Workspace
Service Dsk
Communication
Circuits
Usage
Delivery
Proj Mgt
Client Mgt
Ops Center
Cloud Ops
Network
Lan
Wan
Voice
Other Network
Cloud Network
Data Center
Enterprise
Other Facilities
Security & Compliance
Security Policy
Compliance
Disaster Recovery
App TCO
Compute
Windows
Linux
Mainframe
Database
Business Applications
Applications for End User Services Internal IT Applications
Finance
IT
HRSales Marketing
Line of Business
Strategy & Plan
Design & Build
Market & Sell
Take Orders
Deliver Products
Service Customer
Mgmt & Support
Finance
HR
Legal
Facilities
Communications
Client Computing
Basic Workspace
Technical Workspace
Shared Workspace
Traveling Workspace
Copy/Print/Fax/Scan
Desk Side Support
Connectivity
Network Access
Remote Access
Comm & Collab
Conferencing
Collab Workspace
Messaging
Email
Phone & Voicemail
App & Integration
App Design & Dev
App Support
Quality Assurance
Prof Services
Prog & Proj Mngt
Bus Process Mngt
Ent Architecture
Hosting
App Hosting
PaaS
DBaaS
CaaS
SaaS
Distribution Manufacturing
Business Services
Business Units
IT Services
Buckets
Service Cost Modeling
Copyright 2016 Thavron Solutions, LLC
47. Discussion
Copyright 2016 Thavron Solutions, LLC
Follow up questions?
Nan Braun
nbraun@thavronsolutions.com
(877) 462-6290 / http://thavron.com /@ThavronSol
48. Catalog &
Asset
Management
Service
Costing &
Billing
Product &
Project
Management
Supplier /
Vendor
Management
Service
Portfolio
A Framework for Business Service Success
Copyright 2016 Thavron Solutions, LLC
Financial LifecycleProduct Lifecycle
TM