My first 3 blogs looked at how Finance can help IT in agile delivery, but how mature does that IT Finance function need to be to support IT and deliver business value? Does it need to be separate function? Can it be part of someone’s role? The answer is… it depends!
To answer the question you need to look at the spend of your IT function and the size of the team, the bigger the team and annual budget the greater the need for dedicated Finance support for IT.
How to Start
In my previous role I engaged the services of Gartner, but having gained that experience I believe that with a series of simple questions asked to stakeholders in IT, Finance and the wider business, that a starting point can be established and simple maturity assessment can be performed.
With these questions and scoring them you can identify the biggest gaps in capabilities and where to start your maturity development roadmap. The output could be mapped to a graphic such as the below, in order to visualise progress and development needs.
A starter for 10 on the questions that I would be asking of my stakeholders, include the following but are certainly not limited to these;
- Does IT have adequate visibility of the General Ledger, i.e. are they seeing accounting data? Is that data understood? Is the data sufficiently broken down?
- How is the IT budget formulated?
- Does IT perform any reforecasting during the year?
- How are IT expenses reported to the business?
- Is there KPI reporting in place?
- What costs are recharged (if any) through chargeback and showback methodologies?
- What project accounting processes are in place?
- What investment management process is in operation in the organisation?
- Does IT perform any form of benchmarking?
- Is there a cost optimisation programme in operation? Is this an on-going discipline or ad-hoc in nature?
My recommendation would be to score question/capability and rank it 1-5, with 1 being poor and 5 being excellent. The lower the score the less mature the capability, so the answers with the lowest aggregate scores from your responses should be the initial areas of focus.
What is IT Finance?
So now you have an assessment of the maturity of IT Finance in your organisation, which could be plotted against a maturity model, you will also have the ability to classify the function as one of the below roles;
This IT Finance maturity ladder shows a progression from a basic offering, that solely looks at bookkeeping for IT through the provision of insight & analysis to above the line and being a fully dedicated IT Finance Function and providing challenge to the business, influencing decisions and ultimately being that trusted advisor.
IT Finance needs to be appropriate to the size and scale of the organisation it is supporting, with the necessary resource and tools to enable the function to be successful. Whatever the budget the principles highlighted here can be applied and used as a basis for continual improvement, if applied correctly.
Links & Further Reading
- Agile Finance
- IT financial management maturity assessment toolkit, June 2016 by Jim McGittigan and John Roberts.