What is IT Financial Management?

Digital business models, new challenges: A development that particularly affects the IT organization of companies. Until recently, IT was a mere service provider on call, but it is transforming and in the near future, it will actively shape business. The age of the IT manufacturer is coming to an end – that of the IT service provider with economic responsibility is beginning. This is changing the role of the Chief Information Officer (CIO) in particular. Up to now, the CIO was primarily a technology manager. The Chief Financial Officer (CFO) and IT controlling monitored him in terms of economic efficiency and supported him in investment decisions. However, the disruption of digital business models now also requires the CIO to have the ability of IT Financial Management (ITFM). In the future, every CIO must be able to manage IT in an entrepreneurial manner.

IT Financial Management makes use of the proven financial management instruments of the CFO and the controlling department – but it also transfers them to the specific requirements of IT. Process goals include viewing the IT organization and IT services from a financial perspective and providing a basis for decision-making.

In the course of digitalization, IT must provide more and more services faster and more flexibly. As a result, the requirements for internal service provision are also changing. The strategy for service provision is becoming more complex. Technologies such as cloud solutions, software as a service or managed service providers can be helpful in the context of outsourcing or outtasking, but the question here is how much IT will be provided by the own organization in the future?

What is the optimal vertical integration in terms of performance, service and cost aspects? Make-or-buy decisions are part of daily business. Here, it is no longer enough for a CIO to simply answer the question of the right, future-proof technology. This is where IT Financial Management comes in.