Funding Sources
Establish sources of IT financing, which may include a centrally allocated IT budget, allocations from other business units, and external sources (for example, joint ventures, industry consortia, vendors, suppliers, clients, and so on). Understand the costs of financing and the expected benefits to be derived from each funding source.
Improvement Planning
Practices-Outcomes-Metrics (POM)
Representative POMs are described for Funding Sources at each level of maturity.
- 1Initial
- Practice
- Obtain IT funding in an ad-hoc/reactive way from a central source.
- Outcome
- There is little understanding of IT funding except as a cost of doing business.
- 2Basic
- Practice
- Obtain funding from a single source (central allocation to IT).
- Outcome
- There is a central view of the funds allocated to IT.
- Metric
- % of IT operations funded a from central allocation.
- 3Intermediate
- Practice
- Obtain funding from multiple internal sources including central allocation and some BU funding (e.g. projects).
- Outcome
- Because funding is internal, the cost of funds is often linked to hurdle rates.
- Metric
- % of IT operations services funded by charge-back.
- Practice
- Fund some IT operations via charge-back to BUs.
- Outcome
- BUs begin to develop apprciation for the cost and value of services delivered (due to charge-back).
- Metric
- % of IT operations services funded by charge-back.
- 4Advanced
- Practice
- Obtain funding from multiple internal sources, including central allocation and a broad range of alternative BU funding (e.g. projects, support) in alignment with the anticipated benefits.
- Outcome
- For each initiative the costs of financing, e.g. opportunity cost, hurdle rates etc., and the anticipated benefits to be derived from these funds are known and understood.
- Metric
- % IT funding by source
- 5Optimized
- Practice
- Investigate funding from multiple sources, both internal and external.
- Outcomes
- Capital costs are optimized.
- Allocation taps into multiple sources of funding to ensure capital cost efficiency.
- Metric
- % of IT funds derived based on capital cost efficiency.