Financial aspects must reflect/support organizational goals and customer needs: appropriate funding allows for successful business models, new/enhanced products/services taking into account conditions and needs
Agile vs. traditional organization funding strategies:
1. Financial policies
Capital costs: cost of purchasing or creating resources, which are recognized as financial assets (depreciation)
Operational costs: cost the organization incurs through its normal business operations
Financial growth is goal of many strategies; finances are required for most strategies
The most common financial policies are:
2. Portfolio optimization
Portfolio: a collection of assets into which an organization chooses to invest its resources in order to receive the best return
Portfolio types:
Use the portfolios to track investments across lifecycle, link investment to anticipated value proposition: strategic tool for informed decision-making to balance investment of new and existing products/services
3. Funding projects, products, services
Not all projects are strategic and require funding beyond the operating budget:
Must have a policy within financial strategy to support the non-strategic project
4. Balancing cost of innovation and operation
Traditionally, innovation is separated from operations. If there is an innovation initiative, staff moved from ops to the innovation team and then moved back when the innovation project completes
Agile organizations need to recognize innovation is part of their culture and ongoing business practices. Every operational budget and employee objective should have some level of innovation
Full cost recover models (working capital fund):
5. Charging models
Many strategies can be used to determine pricing. For existing products/services, must be competitive and will show cost, price, profitability
Must consider long-term pricing impacts in a digital age – competitors will quickly create the same products/services – must have a level of flexibility and a policy around profits and margins
For services offered internally, have a policy that makes the cost of technology transparent:
Digital charging models:
Type | Description |
Free | Offer a free-to-use product or service that is supported by other forms of revenue, such as advertising or referral/affiliate |
Freemium | Offer a free-to-use product or service that is supplemented by additional paid packages |
Tiered | Offer different packages with increasing levels of features at different price points |
Dynamic/variable | Seven types of dynamic pricing are shown |
Go back to ITIL 4 Strategic Leader Certification Course: Customer/Market Relevance to finish this chapter or to the main page ITIL 4 Strategic Leader Certification Course.
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