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IT Consumption-Based Service Management

By January 19, 2015Article

IT prides itself in attracting and growing some of the most creative minds in the business. If you don’t agree they are creative, just introduce a new set of staff productivity measures (remember lines of code and function points?) and see how long it takes for them to find a way to “beat” those measures. However, IT has limited success in quantifying just how technology investments are delivering value to the business.  

While governance processes and formal business cases are the norm for introducing major projects, the CIO is often left without the right data to demonstrate whether a project delivered measurable benefits to the bottom line. Even worse, there is no way to explain everyday operational metrics such as usage patterns in terms of who is using IT resources and at what level.   

Adopting the consumption-based model 

Consumption-based IT service management provides IT the ability to determine who is using services, what the usage patterns are, and where the resources are being used. The principles of consumption-based service management are appropriate for labor, network and computing services. IT must be considered as a key foundational function of your operation’s IT-as-a-Service (ITaaS) strategy. 

The convergence of public cloud options with legacy services demands that IT alter its traditional, top-down view of how resources and financials are managed and delivered. Even those organizations that have built service-costing models recognize that having real-time access to consumption information can improve the accuracy of their costing models.

Having real-time usage data identified by user and application actually reduces the need for allocations in order to show how IT services are being used to support the business. Pairing unit costs with actual usage, and marrying it with organizational intelligence gives the CIO a whole new starting point for communication. 

Opening the lines of communication 

Knowing what work is being performed, where it is being performed, who requests the work and what technology is deployed delineates the conversation between the CIO and the rest of the business. The CIO does not have to endure a myriad of questions about why labor dollars make up so much of the rate or why software costs are so high. Armed with granular details about the cost of an application or service, the conversation can focus on whether the business is deriving any tangible benefits that outweigh the technology costs involved.  

Cloud options are transforming the CIO into the role of a technology broker. This means having the information needed to evaluate and explain sourcing options to users that demand flexibility and agility to do their jobs. Consumption-based data can define what resources are needed and show cost comparison alternatives. The CIO can use factual data to show whether in-house resources would be stranded, adding to the cost proposition, or whether a specific cloud service provider really delivers the best value. 

Granular usage data doesn’t lie 

The data is relevant when the CIO is evaluating optimization plans as well. When granular usage data is aggregated across the operation from a series of unique tools, a new perspective is provided. Now the CIO can view the effectiveness of current management processes from a business owner perspective and understand what impact individual deployment decisions are having overall. 

Consumption data displayed by geography may reveal under allocations in one area and excess capacity in others. If workloads can be better managed globally, the cost of acquiring and deploying new resources can be avoided or delayed. Historical usage patterns coupled with forecasting capabilities move IT from a reactive mode to one that is proactive. 

The opportunity to express IT consumption with associated costs is not a chargeback solution. There is nothing that requires the consumption data to become billing data. Consumption information is at the heart of scalability and agility. Actually knowing who is using what volume in what patterns, coupled with real costs, is how IT can deliver value to the overall business.   

Penny Collen is the senior financial solutions architect at Cloud Cruiser, Inc. Her work in operations and development provides a foundation for business process analysis across a broad spectrum of disciplines including asset management, service pricing, software capitalization and activity-based cost models for hybrid IT. She is sought as trusted advisor on IT financial processes, activity-based costing and chargeback. Ms. Collen was recently named IT Financial Educator of the Decade by the IT Financial Management Association. 










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