ITFM Systems Attract Moderate Investment

January, 2015

IT financial management (ITFM) systems are taking on added importance as IT organizations navigate the transition to cloud applications and infrastructure. In making that transition, IT executives will need to demonstrate the value of IT, improve cost-accounting capabilities, maintain control over IT spending, and support sound IT decision-making throughout the business units. Having the right ITFM systems and tools to gather, analyze, and present IT operational data can make these challenges easier.  

Most organizations have enterprise-wide financial management systems, but these systems lack the capabilities needed to manage IT costs at a detailed level. ITFM software, therefore, does not replace the organization’s accounting system, but supplements it and shares information with enterprise financial systems. ITFM systems gather information from a variety of sources, allowing IT decision-makers to accurately track expenditures, model costs, track usage, manage the chargeback/showback of IT costs to business units, and make forecasts and projections.

The adoption profile in Figure 1 from our study, IT Financial Management System Adoption Trends  and Customer Experience, provides a context for understanding adoption activity in relation to the adoption of other technologies. In the profile, we compare the adoption, investment, return on investment (ROI) success, and total cost of ownership (TCO) success rates of ITFM systems against the rates for 14 other technologies that we surveyed.

ITFM Fig 1 - ITFM Systems Attract Moderate Investment

The ratings come from the annual Computer Economics Technology Trends study. Compared with the other technologies in the study, we rate the adoption as just reaching into the high range, while investment rates for ITFM remain moderate. ITFM is a familiar and mature technology that has demonstrated its value. Companies are continuing to invest in systems to manage IT finances, but at a rate that is about on par with many other technologies.

The ROI success rate is also in the moderate range. The study defines the ROI success rate as the percentage of organizations reaching at least a break-even point on the investment within a two-year period. Companies using ITFM systems are achieving a return on their investment at a rate that is in line with most other technologies we surveyed.

The TCO success rate attains the highest rating of these four categories, and it is significantly higher than the average of the other technologies. This means that companies using ITFM systems are being particularly successful at predicting the cost of acquiring, implementing, and maintaining them. Unlike some other application systems, IT financial management tools are relatively easy to deploy.

ITFM software is available for on-premises deployment and, increasingly, as a cloud service. Some vendors offer it as a stand-alone product, while others incorporate ITFM features as part of a larger IT service management suite of products.

In the full study, we examine ITFM adoption trends, customer experience, and the major providers of ITFM solutions. Our study finds that ITFM solutions are being consistently used by organizations of all sizes and in all industry sectors. While many are achieving excellent results by adopting ITFM solutions, buyers should closely manage implementation to ensure economic returns are achieved.

This Research Byte is a brief overview of our report on this subject, IT Financial Management System Adoption Trends and Customer Experience. The full report is available at no charge for Computer Economics clients, or it may be purchased by non-clients directly from our website (click for pricing).