ServiceNow Financial Management
Large organisations who have outsourced their IT operations often struggle to validate the invoices being received and determine how to fairly on-charge the costs to business units. It can be an unfortunate beginning to what should develop into a long and prosperous relationship. ServiceNow have introduced an application called ServiceNow Financial Management to easily connect IT costs to consumers.
ServiceNow Cost Transparency maps actual service costs such as business services, applications, projects, and infrastructure to their consumers. ServiceNow Financial Reporting makes it easy for financial analysts and business unit owners to measure and show charges based on the actual consumption of services. Together, Cost Transparency and Financial Reporting provide visibility into spend based on actual utilisation and create a more cooperative relationship between IT and the Business so that everyone understands the cost of the IT services they use.
Key components of ServiceNow Financial Management are rate cards and expense lines. Rate cards determine what is being charged for. Expense lines are generated on the agreed data for each expense according to the rate card.
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Entrago completed a Financial Management implementation at a large health organisation in Queensland. This project sought to understand the actual costs incurred by our client in receiving services from their service provider. Their service provider delivered a range of services with many different cost models being applied for different service types. Following analysis and reporting developed by entrago, our client was able to demonstrate annual savings of over $500,000 and many days of effort every month in reconciliation. These savings came from making sure that service provider billing was in line with contractual requirements and what was actually occurring.
Another implementation of the Service Now Financial Management module at a large national private organisation resulted in over $1 million in savings. A review period was introduced between when the billing data was generated, and prior to the data being processed into SAP. In one case there were phone charges being generated by a building which was no longer in operation.
ServiceNow offer a 2 day course for ServiceNow Financial Management Fundamentals which is suitable for IT Finance and Technology Business Management Professionals, Line of Business Managers, Service Owners and Administrators and Implementers.
The implementation of ServiceNow Financial Management should typically be cost neutral for customers, and provide valuable information to your CIO on where your IT dollars are being spent and which parts of the organisation are consuming them. The information provided may well determine where your next cost reduction projects should be directed.
One of the keys to getting value from ServiceNow Financial Management is having good quality data as this is the basis for calculation.
Having clarity around how services are costed is beneficial while you are using an external service provider, such as under an MSA. It is also invaluable when setting up an MSA, or renegotiating one. Having the data and metrics already available in ServiceNow upon which the MSA will operate provides simplified MSA dealings and highly transparent cost and service outcomes.
Entrago can assist in the data cleanup, structuring your cost models and implementing Financial Management as part of an MSA or just to better inform internal cost of service understanding.