Purpose: to support the organization’s strategies and plans for service management by ensuring that the organization’s financial resources and investments are being used effectively

Main characteristics:

• Support decision making by providing reliable financial information
• Concerned with the economics of product and services:
  • Understanding and optimizing the financial aspects of service delivery and consumption
  • Understanding and optimizing the costs of the organization’s products throughout their lifecycle
  • Providing high-quality financial information about products and services to stakeholders

Does not make funding decision, prioritizing investments, distributing profits (strategy management, risk management, portfolio management)

Roles in SFM (hard to find right capability):

• Organizational finance
• Digital product and services

Overcome by:

• Including finance professionals in the digital product teams (focus on SFM)
• Include digital and IT business partners with the finance team (focus on digital products and services)
• Include a dedicated finance time within the IT department (focus on SFM)
• Provide specialized training in SFM for the product/service managers and IT leaders

1. Practice success factors (PSF)

Two PSFs for SFM:

• Ensuring that the organization's service financial management supports its overall strategy and stakeholder requirements
• Ensuring that reliable financial information is available as needed to support decisionmaking

1.1 SFM supports overall strategy

SFM has the purpose of improving the quality of decision making with reliable and accurate financial information about products and services: must have a defined approach to the identification of costs and detail needed in budgeting and pricing

SFM is an overhead: must balance the cost of the practice to the benefit received (use the guiding principles to ensure SFM provides the necessary benefits)

	Application to the service financial management practice
Focus on value	Start by identifying stakeholders and their needs. Do not spend resources on features that do not bring any benefits
Start where you are	Analyze currently available information, tools, and procedures. Consider optimizing and integrating them before investing resources in a new solution
Progress iteratively with feedback	Expand the scope and details of the practice iteratively, with regular and careful consideration of the feedback. The practice has many interconnected parts (for example, budgeting depends on the cost model), so ensure that the first iterations are good enough to continue
Collaborate and promote visibility	The quality of the cost data depends on the understanding and readiness to cooperate across the organization. Explain, promote, and engage people to ensure that cost data is accurate, timely, and relevant. Demonstrate the benefits of good service financial management to the stakeholders
Think and work holistically	Ensure a holistic understanding of the costs of products and services, considering all types of resources and costs. Do not limit cost and budget models to the data that is easy to get and allocate. At the same time, do not overcomplicate the models
Keep it simple and practical	The practice and its models and reports should be as simple and practical as possible. Verify this with the stakeholders; ensure there is no unnecessary data in the reports. Reports should be tailored for the needs of the decision-makers
Optimize and automate	Optimize resource-consuming procedures, especially the collection and processing of cost data (particularly related to people’s costs). Where reasonable, automate data collection, processing, and reporting

1.2 Financial information is available

SFM is a subset of organizational financial management, don’t solely focus on compliance and control. SFM primary focus is the provision of reliable financial information to stakeholders

SFM tightly related to practices that provide management information:

• Knowledge management
• Service configuration management
• IT asset management

SFM inform management decision to:

• Strategy management and risk management
• Capacity and performance management, availability management, and service continuity management
• Workforce and talent management and supplier management

Go back to ITIL 4 Strategic Leader Certification Course: Practices to finish this chapter or to the main page ITIL 4 Strategic Leader Certification Course.