Why every IT department needs Predictive Showback?

Do you get pressure to defend IT spend?

Does ‘shadow IT’ come out of your budget?

Are you unable to retire outdated applications/hardware?

Is there friction between your CFO and CIO?

Is there a goal to ‘Run IT Like a Business’?

If you?answered ‘YES’ to any of the above questions, then it’s time to update your showback from a traditional model to a predictive showback solution. ? Before we explain why, let’s quickly review the difference between traditional showback and predictive showback.

What is Traditional Showback?

Traditional showback applies cost models against General Ledger data.? It basically takes whatever costs were assigned to IT by Finance and require them to reverse-engineer those costs into Services, Projects, and Demands. ? It’s like being at a destination, and you have to work backward to figure out how you got there.? Seems crazy, but that’s how most showback solutions work.? And, traditional showback only focuses on actual costs and ignores the planned and committed costs - which is crucial for ‘Running IT Like a Business’.

What is Predictive Showback?

At face value, ‘Predictive Showback’ is an oxymoron – ‘Predictive’ indicates a future state, whereas ‘Showback’ is a historical state. ? But, in the world of ‘Predictive Showback’, we are ‘predicting’?what each business unit will see in their future showback cost; it is the thread that links the past, present, and future of IT spend.? Sounds complicated but it’s actually much easier than traditional showback because you’re collecting information as you go - rather than trying to reverse-engineer it later.??

Predictive Showback can show metrics such as:

• The potential ROI of your spends on different resources and services
• Whether the tier of a particular service is aligned with business needs
• Whether there will be any surprises that might be missed by only looking backward

You can connect the insights offered by predictive showback to your strategic goals, business value, and better justify your resource allocation choices to both the executive team and the broader organization as a whole.

How does Predictive Showback help an IT department?

There are many, but here are 3 of them:

1. Defend your IT Budget, thereby letting you better justify the resources needed for programs, projects, and portfolios—and adjust forecasts as needed.
2. Incorporate other department’s business goals—so you can strategize with them to fully understand the activities you should focus on for optimum outcomes.
3. Identify any gaps in your IT budget that might set your plans up for failure—and make the necessary changes so that you’re poised for success instead.

Tips to implement predictive showback at your organization

1. Start Small—and Make Strategic Choices

There may be expectations on your team to rush into predictive showback and start doing everything at once. But that can sometimes feel like ‘boiling the ocean’. ? We recommend a focus on the biggest cost drivers first and assigning the remaining costs based on those cost models. ? Once that feels good, take the next chunk and assign cost models to them.? It’s important to remember that you are trying to get acceptance across the organization, and demonstrating regular progress that is believable has a higher degree of success than a ‘big-bang’ that nobody trusts.???

2. Choose the Right Drivers

Predictive Showback can be a jumping-off point to strategic conversations around your IT department’s future investments and lead to more insightful decision-making. To achieve that, you’ll want to make sure you’re focused in the right areas. Target operational drivers that allow IT to have strategic conversations with Finance (Investors) and Business Units (Consumers)? to get away from the ‘Spend Less/Do More’ comments.

3. Pick the right platform

Many showback solutions are ‘bolted-on’ to existing infrastructure. ?This means they need to reverse-engineer information that probably already exists in other parts of the organization. ? We encourage people to business-enable ServiceNow’s Common Service Data Model (CSDM) and capture? IT financials there. ? This isn’t about displacing other solutions in the organization; it’s about a cohesive strategy that eliminates multiple sources of ‘truth’ by sharing information across systems. ? Running Cost Models against the CSDM is not only much easier, but it’s also more defensible, and costs are often already normalized before showback efforts begin.??

4. Don’t Forget the Human Side

Predictive showback requires a combination of people, processes, and tools to be successful— you don’t want to let any of those lag behind. While technology and data may be critical in driving the performance of your predictive showback efforts, your team and the instincts they bring to your findings are just as important. It’s that combination of human experience and data-driven insights that will put your efforts in the best place to thrive.

Conclusion

Done right, predictive showback can increase your IT department’s efficiencies, demonstrate IT’s value in supporting the company’s strategic initiatives, and ensure continued investment in the Business Value of IT. If you own ServiceNow, you already have the best platform for doing predictive showback (trust me, we’ve looked).???

If you’re trying to Run IT Like a Business, you need Predictive Showback.? Otherwise, you’re just bundling disparate efforts together and missing out on the Business Value of IT.?