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Funding Sources

A1

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.