12. ITIL | Financial Management purpose,scope,objectives
This ITIL core foundation video explains about the scope,purpose and objectives of financial management process and associated activities which is part of service strategy.
Purpose of financial management
To secure appropriate level of funding to design, develop and deliver services that meet the strategy of the organisation.
It is a gatekeeper that ensures the service provider does not commit to services which they are not able to provide.
Identifies the balance between cost and quality of service and maintains the balance of supply and demand between the service providers and their customers.
Objectives of financial management
Defining and maintaining a framework to identify, manage and communicate the cost of providing services.
Evaluating the financial impact of new or changed strategies on the service provider.
Facilitating good stewardship to service customer asset and to ensure that the organisation meet its objectives.
Executing the financial policies and practices in the provision of the services.
Accounting for money spent on the creation, delivery and support of services.
Scope of financial management
Managed by professional accountants which set financial policies, budgeting procedures, financial reporting standards, accounting practices and revenue generation or cost recovery rules.
Often a separate function either reporting to the CIO or CFO, but with some form of functional reporting between the two areas.
Consists of three main processes budgeting, IT Accounting, Charging.
Financial management activities:
Budgeting
Predicting the expected future requirements for funds to deliver the agreed upon services and monitoring adherence to the defined budgets.
Accounting
Enables the IT organisation to account fully for the way its money is spent.
Charge back
Charging customers for their use of IT Services.
Demand Modelling
Working with the process of demand management to anticipate usage of services by the business and the associated financial implications of future service demand.