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Service Innovation: Reinvigorating IT Financial Management for the 3rd Platform

Service Innovation: Reinvigorating IT Financial Management for the 3rd Platform

This IDC study describes the important steps and the high-level business case to reinvigorate the IT financial management discipline to "run IT as a viable service business." This requires the development of a service/consumption-based managerial accounting model that clearly answers:

  • What are the IT services?
  • How much do they cost?
  • How should they be priced?
  • Which customers are consuming these services?

Once IT services are aligned to customer consumption, then the combined impact of exploiting 3rd Platform innovations in support of business cost reduction initiatives and new revenue-generation capabilities can be better measured. An outline of the business case to make the necessary investments to move in this direction is also provided. Target readers would include the CIO and senior executives and their staff in IT financial management and IT service management.

"IT financial management has been a sideline activity in IT for many years, and it needs to be reinvigorated to help IT successfully compete on the 3rd Platform," says Robert Multhaup, adjunct analyst with IDC's Research Network. "Invigorating IT financial management is not about becoming better accountants to support the traditional positioning of IT as an overhead collection of cost centers; it is about transforming the entire IT business model to operate more as a fully viable service business based upon sound financial and market principles."

Please Note: Extended description available upon request.

IDC Opinion
In This Study
IT Executive Program Research Agenda
Situation Overview
Designing a New Managerial Accounting Model
Step 1: What Services Does IT Sell to Its Customers?
Step 2: How Much Do the IT Services Cost?
Step 3: Who Are IT's Customers, and How Much IT Are They Consuming?
Step 4: What Is IT's Measurable Contribution to the Business?
The Value Proposition of a New Managerial Accounting Model
Critical Success Factors for an Invigorated IT Financial Management Discipline
People: Build a Managerial Accounting Team
Process: Design and Build a Managerial Accounting Model
Data: Collect and Continuously Improve Data Quality
Future Outlook
Essential Guidance
Learn More
Related Research
Table: Benefits of Consumption-Based Management
Figure: IT Executive Program Research Agenda Themes

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