Checklist Financial Analysis

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ITIL Process: ITIL 2011 Service Strategy - Financial Management

Checklist Category: Checklists ITIL Service Strategy

Source: Checklist "Financial Analysis" from the ITIL Process Map

 

The Financial Analysis is an important input to the Portfolio Management process. It contains information on the costs for providing services and provides insight into the profitability of services and customers.

 

The Financial Analysis typically contains the following information:

 

1. Service-focused analysis
   1. Costs for the provisioning of each service, itemized by cost types (e.g. licenses, material, labor)
      1. Direct costs (clearly attributable to a specific service)
      2. Indirect costs (shared among multiple services)
   2. Trends in the provisioning costs for services
   3. Variable cost dynamics
      1. Estimates of how costs will change in the case of
         1. Increasing service demand
         2. Decreasing service demand
      2. Thresholds of service demand which require the service provider to make significant investments
   4. Service Value Potential (estimate of the price a customer is prepared to pay for the services)
      1. Competing alternatives and their prices
      2. Value of the service provider’s comparative advantages (e.g. unique knowledge of the customers’ business processes, security concerns)
      3. Costs for switching to competing service offerings
   5. Profitability
      1. Actual revenues from each service
      2. Profit margins for each service
   6. Identification of financially unviable services
      1. What services are no longer provided efficiently relative to competing offers
      2. What services are provided to customers at a financial loss?
      3. What services risk becoming unprofitable because of declining demand?
2. Customer profitability
   1. Actual revenues from each customer
   2. Profits from each customer
3. Asset valuation
   1. Values of tangible service assets (infrastructure components)
   2. Estimates of the values of intangible assets (e.g. technical expertise, knowledge of the customers’ business processes)
4. Actual vs. planned spending: For all items covered in the IT Budget:
   1. Forecast (planned budget)
   2. Actual spending on record
   3. If applicable, gap analysis
5. Funding options: Possible savings from leasing/outsourcing technology as opposed to owning it (shifting costs from the CAPEX budget to the OPEX budget)
6. Post-Program ROI (Return on Investment) Analysis: Assessment if financial objectives of past investments have been met
   1. Investment/ project
   2. Business case
   3. Budget spent
   4. Expected benefits
   5. Realized benefits