Top 5 Financial Management Predictions for 2010

CIO.com's Brian Carlson sits down with Sunny Gupta, co-founder and CEO of Apptio, a provider of on-demand IT financial management SaaS (software-as-a-service) products. Gupta discusses five key trends for financial management in 2010.

Recently I was able to sit down for a discussion with Sunny Gupta, co-founder and CEO of Apptio, a provider of on-demand IT financial management SaaS (software-as-a-service) products.

Apptio's IT financial- management package is intended to provide greater visibility into the TCO (true cost of ownership) of IT products and services. The desired result is so that businesses can identify ways to reduce IT costs and Apptio contends, making better decisions and providing the business with a more accurate reflection of true IT cost.

With this level of increased visibility into the IT cost structure, it is inevitable that there may be some resistance from senior IT leaders to this degree of scrutiny into their operations by the business. Gupta reflects on what this means to IT leaders and what he believes will be five key trends for financial management in 2010.

1. CIOs Will Adopt Greater Financial Management Discipline.

Gupta believes that enterprises will no longer be able to manage IT without automated financial- management systems in place. He argues that drastic cost cutting has made CIOs realize that they cannot run IT without proper financial management discipline. General purpose spreadsheets or corporate planning systems may no longer be sufficient to manage the myriad of computing models and dynamic nature of todays IT infrastructure.

2. CEOs Will Require IT to Demonstrate Value of Services.

IT organizations that cannot explain the total cost of an IT service to business leaders may begin losing credibility. Like any service provider, IT must track the cost of delivering goods and services, and have systems in place to analyze, allocate and reduce costs, while also communicating to the CEO and other business leaders the value IT provides.

3. Role of the CIO Will Shift to a Service Provider.

Up until this decade, the role of the CIO has traditionally focused on technology. In the past if the business users wanted to implement a new application or technology, their only real choice was to obtain support from internal IT. During the last few years, however, several forces have gained critical mass to drive change to that model.

Internal IT is now one of many options, and today's CIO should act as a central "service provider," pooling IT resources for efficiency and delivering services to many different buyers within the organization. As a service provider, CIOs should develop better processes for managing the supply and demand of IT services, whether sourced internally or externally, and the cost and quality of those delivered from his organization.

4. IT Lleaders Must Understand Costs and Benefits of Cloud Computing and SaaS.

Business leaders now have the option of going directly to outside vendors to purchase IT services. This has potential to put incredible pressure on IT leaders to understand their internal cost per service, and whether or not a cloud or SaaS offering is truly better for the business.

Additionally, there is still a lot of hype and uncertainty around the full cost of cloud computing services, requiring more in-depth analysis of the cost-benefit tradeoff of the cloud. The adoption of SaaS and cloud computing will continue to grow exponentially, and better management systems and cost analysis will grow with them.

5. Virtualization Drives Shared Services Model.

In the past, each business unit owned its piece of IT and managed its portion as an expense of doing business. Today in most organizations, IT acts as a central service provider to all business units.

This distributed shared-services model, accelerated by technologies such as virtualization, makes it complicated to accurately track chargeback, usage and ROI. The combination of the shared service model and virtualization technologies should drive adoption of more sophisticated IT financial management systems that can track the cost and usage of IT services in this complex environment.

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