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Troy DuMoulin, VP, Research & Development

Troy is a leading ITIL®, IT Governance & Lean IT authority with a solid and rich background in Executive IT Management consulting. Troy holds the ITIL Service Manager and Expert certifications and has extensive experience in leading IT Service Management (ITSM) programs with a regional and global scope.

He is a frequent speaker at IT Management events and is a contributing author to multiple ITSM and Lean IT books, papers and official ITIL publications including ITIL’s Planning To Implement IT Service Management and Continual Service Improvement.


The Guide

"This blog is dedicated to making sense out of the shifting landscape of IT Management. Just when we thought we had a good handle on managing technology, the job we thought we knew is being threatened by strange acronyms like ITIL, Lean, Agile, DevOps, CMMI, COBIT, ect.. Suddenly the rules have changed and we are not sure why. The goal of this blog is to offer an element of sanity and logic to what can appear to be chaos."

Hitch Hiker's Guide to the Galaxy

"In many of the more relaxed civilizations on the Outer Eastern Rim of the Galaxy, the Hitch Hiker’s Guide has already supplanted the great Encyclopedia Galactic as the standard repository of all knowledge and wisdom, for though it has many omissions and contains much that is apocryphal, or at least wildly inaccurate, it scores over the older more pedestrian work in two important respects.

First, it is slightly cheaper: and secondly it has the words DON’T PANIC inscribed in large friendly letters on its cover."
~Douglas Adams


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PR 62 - How To Get The Money You Need For IT

Every Service Owner Is An Internal Entrepreneur

In this episode of Practitioner Radio, George Spalding and I are joined by our guest Dean Meyer, President of NDMA and the author of Internal Market Economics. During this podcast we discuss the criticality of understanding the principles of Service Costing and Investment Based Budgeting.

“To truly add value to the business – indeed, to survive – internal IT organizations need to be savvy about their financial and resource-governance processes. And to design effective processes, four distinct ITIL processes must be integrated. Here’s why….

The IT Industry is no stranger to change. Those changes typically come in the form of technology advancements, which prove “Moore’s Law” and revolutionize the technology landscape. Recently, many internal IT functions are facing a new type of pressure to change, one that has little to do with technology. With the rise of cloud computing and the growing sophistication and marketing prowess of the managed-services vendors, IT is competing to maintain its market share as business units shop IT services outside. To compete against the growing consumerization of IT services, internal IT departments need to move from a technology-centric focus to what is being called an “IT Services Organization.” The goal is not to establish IT as an arm’s-length business, but rather to move from simply a technology supplier to a strategic partner that understands business strategies and can communicate the strategic value of IT.

As a key part of this partnership, a competitive internal IT function must be able to demonstrate how business investments in IT are mapped to services and products which deliver business benefits and enable business objectives. Without this ability to map investment to outcomes, business clients see IT’s costs but may not appreciate its value, putting an internal IT function in an unfavourable light compared to external service providers. Essentially, this means running IT as a business within a business, with sound business practices like product marketing, account management, and financial management. The financial management of an IT Service Organization include practices such as publishing a catalog of services with costs, and negotiating a budget based on the costs of the services and products that IT is expected to deliver – an investment based budget. In short, IT must move beyond a discussion about what it does to what it sells.

To address these challenges, ITIL defines four process areas – demand forecasting, service portfolio management, service costing, and budgeting. In ITIL, these are four distinct processes. But to be effective, these four processes should be integrated in a single annual planning process.

Show Notes:

  • Introductions: Dean Meyer President NDMA and Author of Internal Market Economics

  • Just back from Pink15
  • The primary drivers for improving IT Financial practices especially costing and budgeting
  • Investor’s need to be able to map their investment to outcomes otherwise you get resentment
  • IT has a trust problem and we bring it on ourselves based on our budgeting practices
  • Investment based budgeting: Budgeting based on outcomes rather than cost centers
  • Many organizations use the bad process of “Rolling Budgets” - or + 10% of spend of last year
  • Some organizations are moving to Service Based Costing but not Service Based Budgeting
  • Key Book - Internal Market Economics
  • For Key ITIL Processes (Demand Forecasting, Service Portfolio, Service Costing, Budgeting)
  • Investement Based Budgeting: Service Portfolio -> Service Catalog -> Services Offerings ->Rates ->Budgets
  • Demand Forecasting = Sales Forecasting
  • Shadow IT = Loss of Internal IT market share due to trust and issues of perceived value
  • To win back market share you need to become the vendor of choice
  • Business Within A Business means running a Service Organization as vendor of choice
  • Vendors of choice now what their services cost and price them according to value
  • Shadow IT is a derogatory term based on competitor resentment
  • Vendor of choice is impossible without understanding your costs and budgets
  • Once we understand our costs we can create the financial governance processes required to run IT as a service organization
  • Every manager in the IT Organization is an Entrepreneur (Service Owner) running a business within a business
  • Service Demand comes from a variety of sources (business units, projects, corporate requirements, IT requirements, etc..)
  • Service Structure: Prime’s and Sub’s - Example ERP Service supported by Network / Storage
  • Internal Business Eco-system = Internal Market Economics
  • How Money Flows (Wedding Cake) direct budgets, business unit bee for service, allocations
  • No one gives you money to pay your costs, they give you money to buy services they value
  • Internal Market Economics does not require charge back
  • Internal Market Economics has two major sub-systems: Planning / Tracking
  • IT must be seen as an investment not a cost
  • Resources:
  • Start with the planning process before you ever consider charging

  • George’s, Troy’s and Dean’s Thoughts What Are Yours?

    “Beware of little expenses. A small leak will sink a great ship.” ~Benjamin Franklin

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    Posted by Troy DuMoulin on 03/03 at 02:14 PM






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