Professional Documents
Culture Documents
Services
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Goal – Primary Objective
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Why Financial Management
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Concepts
• Accounting and Budgeting (mandatory)
- Understand costs involved in providing a
service
- Prediction of future costs
- monitor actual against predicted costs
- Account for monetary spend over given period
• Charging (optional)
- Recovery of service costs from Customer
- Operate IT Division as a business unit if
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required
IT Financial Cycle
Business IT Cost Analysis
Requirements IT Operational Plan Charges
(inc. Budgets) (Accounting)
Financial Targets
Costing Models
Charging Policies
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Cost Model
The Cost Model will consist of
COST ELEMENTS
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Key elements in determining the
cost of a service
• INDIRECT COSTS – NOT directly attributable but
shared.
Cost: Price=cost
Going rate: Price is comparable with other internal groups (internal X charge rate)
Market rate: Price matches that charged by external suppliers (open market price)
Fixed Price: Set price is agreed for a set period based on anticipated usage
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Benefits
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Fin
Exam Tips
• ABC of Finance
Accounting (MAN)
Budgeting (MAN)
Charging (OPT)
• You must have a cost model before you can charge
• Charging shows Total Cost of Ownership
• THE SPA – Cost Types
• Overhead or indirect cost total cost of indirect materials
wages and expenses.
• Direct cost can be traced in full to a product or service,
cost centre or department e.g. Wages
• Indirect Cost cannot be traced directly in full to product or
service, cost centre or department because it has been
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apportioned.
Exam Questions
• Without a good Accounting System you cannot:
A Both
B Only 1
C Neither
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Exam Questions
• Which of the following is NOT the concern of IT Financial
Management?
A Telephone charges
B Invoicing
C Differential Charging (High and Low Tariffs) – Demand
Management Method used in CAPACITY MANAGEMENT
D Reviewing IT service quality
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Exam Questions
• Which of the following statements on IT Financial Management is
correct?
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