ITIL Financial Analysis

Contents

• Service-focused analysis • Customer profitability • Asset valuation • Actual vs. planned spending • Funding options • Post-Program ROI (Return on Investment)

Analysis

Service-focused analysis

• Service-focused analysis • Costs for the provisioning of each service, itemized by cost types (e.g. licenses, material, labor)

– Direct costs (clearly attributable to a specific service) – Indirect costs (shared among multiple services)

• Trends in the provisioning costs for services • Variable cost dynamics

– Estimates of how costs will change in the case of • Increasing service demand • Decreasing service demand

– Thresholds of service demand which require the service provider to make significant investments • Service Value Potential (estimate of the price a customer is prepared to pay for the services)

– Competing alternatives and their prices – Value of the service provider’s comparative advantages (e.g. security concerns) – Costs for switching to competing service offerings

• Profitability – Actual revenues from each service – Profit margins for each service

• Identification of financially unviable services – What services are no longer provided efficiently relative to competing offers – What services are provided to customers at a financial loss? – What services risk becoming unprofitable because of declining demand?

Customer profitability

• Actual revenues from each customer • Profits from each customer

Asset valuation

• Values of tangible service assets (infrastructure components)

• Estimates of the values of intangible assets (e.g. technical expertise, knowledge of the customers’ business processes)

Actual vs. planned spending

• For all items covered in the IT Budget: • Forecast (planned budget) • Actual spending on record • If applicable, gap analysis

Funding options

• Possible savings from leasing/outsourcing technology as opposed to owning it (shifting costs from the CAPEX budget to the OPEX budget).

Post-Program ROI (Return on Investment) Analysis

Assessment if financial objectives of past investments have been met.