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6fusion + IT Financial Management Tools = Unprecedented Visibility

IT Financial Management (ITFM) tools enable technology leaders to manage their business with the same process driven accuracy, financial visibility, and discipline as their corporate peers.  In short, they provide visibility into precisely what IT is spending.

For those who aren’t familiar with how IT Financial Management tools work, data is pulled directly from accounting general ledgers for software, hardware, and every IT “soft cost” in between. Data models are applied to combine those costs into stacks and cost centers for management purposes. Key reports are then built and made available for all constituents to access. This visibility lets organizations make better allocation decisions, accelerate initiatives for investments and drive greater efficiency. Think of it as financial accounting for IT – a very powerful tool to understand how an organization’s scarce resources are being spent.

One of the main reasons to adopt IT Financial Management tools is to gain the cost insight necessary to develop a cost allocation / chargeback strategy that is transparent, and based on the actual costs of running the business. Instead of charging a department based on their size or the number of computers, IT organizations can show actual spend numbers for each department. This allows the IT department to act more like an internal service provider, just as you would see pricing from an external service provider. The pricing of services is presented in a rational way that is also defensible.

There is clear-cut data to answer the question, “Why did my bill go up by 20%?” This cost transparency is extremely valuable. There are however, some areas that can be improved upon, including how to measure exactly how many resources are used in large-scale virtual environments, and how cloud based workloads impact the model.

 With the integration of 6fusion’s WAC based utility model, IT Financial Management tools become even more powerful.

Instead of relying only on an arbitrary definition of a server as the standard unit of measure to calculate spend, organizations can extend the IFGM-based cost model, and use 6fusion’s Workload Allocation Cube (WAC) as the standard unit of measure to calculate actual usage of IT resources. As mentioned in previous blogs, the WAC offers an open, impartial, and consistent view of IT infrastructure resource consumption and the output yields a single representative unit value of actual consumption. This model improves the existing ITFM-based cost models by changing from a fixed view of how resources are consumed, to a fact based view of ACTUAL resource consumption. Real consumption-based costing can yield significant improvements in cost allocation / chargeback, even over and above those provided by ITFM tools. This is particularly true in hybrid or cloud environments, where differing economic models are used, and consumption can be highly variable.

 With a successful shift from outdated owned or allocation model into a consumption or usage-based model, organizations can:

·      Directly compare costs between platforms to improve allocation decision making.

·      Access a holistic view of infrastructure consumption, needs, and cost allocation.

·      Perform baseline comparisons between internal and external operations.

·      Set long term goals for improved efficiency and measure the results of investments.

Initial work with 6fusion and IT Financial Management tool integrated customers has shown up to a 30% improvement in accuracy for chargebacks and cost allocation.

With an integrated tool, organizations also have access to better benchmarking. Using the WAC as the standard unit of measure provides the ability to compare apples-to-apples costs with external service providers like Amazon Web Services or Microsoft Azure.   Business units can see that they’re being charged a fair amount for their software and services.

There are benefits to this integrated approach for Capacity Management teams as well. Capacity Management often involves manual methods to determine how much capacity an organization has, how much is being used, and what may be needed to manage future bottlenecks. 6fusion provides a near real-time view of capacity needs, and automates a lot of those calculations that used to take hours or days of valuable team resource time.

6fusion’s consumption patterns also help organizations understand what their IT Financial Management tool figures mean. For example, without the integration, an organization might see that their excess storage capacity is 48%. But what does that 48% mean in terms of future storage needs? Will that capacity last two days, two months or two years? With 6fusion’s consumption patterns as a guide, this question is easily answered, and IT can adequately prepare for future storage needs.

Synergy between 6fusion and IT Financial Management tools provides the entire picture – the costs of an organization’s infrastructure resources down to the granular level of usage. It’s a bottoms-up approach to figuring out how each IT dollar is being spent across the organization, allowing for accurate cost allocation.

6fusion’s mission is to organize the global market for IT infrastructure and bridge the gap between Finance and Technology through the power of information.  By combining actual IT consumption data, existing cost data, and standardized IT industry data to drive improved forecasting, venue decision making, and external benchmarking 6fusion will take IT transformation projects to the next level in the IT Financial Management domain.

To find out more, visit 6fusion at www.6fusion.com or follow us on twitter @6fusion