Where does itSMF International get its money from?

Having recently stumbled on the itSMF International annual report for 2008/2009 (if there was any notification to members I don't recall seeing it, but then I don't recall many things...) I've been having an interested read of the financial accounts. One big question stands out: where does the money come from? In fact I'm left with a few questions after reading the accounts.

In 2008 we (I'm an itSMF member) received £268,485 (that's Pounds Sterling, real money, none of your sickly little greenbacks here) for "Global Sponsorship". In 2009 we received nothing. This would have swung itSMF from a hundred-thousand-pound profit to a hundred-thousand-pound loss. But luckily "Examination Certification" soared from a nice round £100,000 to £601,749. In other words that revenue item leapt by 500%. We all know ITIL training has gone mad but not that mad.

And what does itSMF do in "Examination Certification"? We're not an EI or an ATO. Might it be ISO2000-related? For that amount of dosh I doubt it (I'm betting ISO20000 accounts for that £1,749 bit). Look in vain for any explanation in that annual report of where this 73% of itSMFI's annual revenue comes from.

I think someone baled out itSMF International, and you might guess that someone was APMG. In June 2008

Cementing their alliance Sharon Taylor, Chair, itSMFI and Richard Pharro, CEO, APMG, signed a contract, which seals the agreement whereby APMG will share revenue generated from the ITIL Foundation exams to help itSMFI expand and support chapters. In return, tSMFI is committed to promoting ITIL globally and supporting the qualification scheme through its involvement n the ITIL Qualifications board.

Does APMG, a commercial for-profit company, pay itSMF six hundred thousand pounds a year for "promoting ITIL globally and supporting the qualification scheme"? If they do I'd like to see the ROI calculation on that. APMG has eight EIs and about 300 ATOs doing all the promotion it needs at no cost to APMG.

So why? Is it that OGC would like to pay us but can't, so APMG does it for them? It's not that I think there is anything dodgy going on here - I just can't work it out. A little more transparency would be a fine thing here.

Another item in the finances that receives no mention in the annual report is that, whilst itSMFI has quarter-of-a-million pounds in the bank which is nice, it is also owed a further £454,377 or 55% of annual turnover. No doubt there is a good reason for this and I shouldn't worry my little head over it, but you'd think that was extraordinary enough to be worthy of explanation in the report wouldn't you? I do.

Or here's another one. itSMFI has done 21 translations so far for OGC and TSO (you won't find THAT in the annual report either). Total costs 2008+2009 = £62,900. Total revenue 2008+2009 = £1120. Just how many copies of the translations have been sold? who is making the money? and when do itSMFI see some return for that?

I did ask itSMF these questions back in January but I've heard nothing back yet.


Here's your answers....

It's fairly simple Rob, to work this out. Incidentally the accounts were presented at the AGM as they are legally obliged to be. The full accounts are in the public domain at UK's Companies House - I think you have to pay £15 to download them. :-)

Members of the itSMFI operating company are not the same as members of itSMF Chapters. The Chapters are the members of the itSMFI operating company and individual members, like yourself, are one step removed from membership of itSMFI, being members of a local Chapter or an employee, (ergo member) of a Global Member of itSMFI. Does this all make sense?

So what does this all mean?

Well, you are right in that a large proportion of the income for last year to itSMFI comes from its contract with APMG, the Accreditor, not the EI (73% = £600k and down as "Examination Certification"). This is for the promotion of ITIL Foundation Certification only and support to the Best Practice Partnership. There is some income coming in from Global members (currently at £20k each per year for the 4 current members, IBM, HP, Sun and CA - mostly pre-paid through good negotiation and down as "Global Membership"). The rest comes from either Chapter Levies (anticipated moving forward at just under £100k per year, down as "Membership Levies") and a little lopped off of the translations done by Chapters and authoring by the UK Chapter, of official ITIL publications. There is some legacy revenue from the old arrangement with VHP for revenues derived from the ITSM library. Most profit on the newly translated books, goes to TSO and to the Best Practice Partnership with the Chapters themselves getting something in return too. This has only really just kicked in and will be reported at FY end this year.

So whilst having 73% of your revenue eggs in one basket might look okay in the shorter term, it's not healthy to maintain this in the longer term and the IEB is seeking to broaden revenue opportunities.

OGC pays nothing to itSMFI although it could be (and often is) argued that a proportion of revenues paid through APMG, is moneys that OGC is prepared to hand off to the movement in order to support the wider itSMF community and this ought to be encouraged.

There is absolutely nothing dodgy going on, so please don't use this language, even in jest! :-) and as the Co. Sec for the organisation under UK law, it's my job as well as the IEB's job, the Auditor's job and the member's job to see that this remains so.

Each and every IEB Director is committed to seeking to securing the company financially, to ensure that it can operate independently and to the wants and needs of its members (the Chapters). It is there to provide added value to the wider movement on things of a strategic importance which say, no single or group of Chapters can deliver on. The Chapters jointly "own" the company don't forget.

The only people that are in a position to "bale out" itSMFI are the Chapters and the IEB themselves and this is done simply by making sure that any agreements that itSMFI has struck with any organisation is done so at the going market rate. APMG is not baling out the company, it's getting a real return for its money.

I think it's testament to the IEB's diligence and ability, that they managed to negotiate the contract with APMG so as to benefit the whole of the movement and that APMG believes it is worth continuing this relationship as it sees a benefit in doing so. Not bad for a bunch of volunteers!

Hope this helps.

So much for the punters

Thank-you Keith for that insight. I did not imply anything dodgy even in jest - I explicitly said I didn't think anything was dodgy, as in illegal.

However the body that is the nominal representative of the training consumer community on the ITIL Qualifications Board, the itSMF, is receiving 73% of its income from the training industry.

Do you think that is a good governance model for a governing Board? I don't see how that is "to benefit the whole of the movement" if the "movement" includes the consumers of training as compared to say those who sell it to them.

And how many paying members of itSMF do you think are aware of where 73% of International's revenue comes from? Do you think that was something worthy of mention in the annual report to members? I'd have expected disclosure

Ah.... Now that is another question :-)

Excellent - we do our best to make sure things are proper and correct :-)

itSMF represents the whole community (primarily the user community) on the QB. First i've heard of them representing the "training consumer industry" - is that a new definition, or a Rob'ism? Do you mean people who deliver training or people who pay for training or people being trained or what? Likewise, By the ITSM(F?) "industry" do we mean people who do ITSM, the vendors, suppliers, clients or what? We need to be specific and careful about what we say here, without spinning and sadly, you are in danger of getting me on my soapbox on this matter! LOL

Essentially and for clarity though, the money provided to itSMFI comes from the examination fee element of an ITIL Foundation qualification (so it's at a very limited level and not across the board) and this money technically, is built into the exam fees paid by people doing an exam not from any training fees or any other fees. So, is it the "examinations industry" you are talking about? :-)

But to be absolutely fair, trainers promote the whole thing as much as do say ITSM'ers, Vendors, (good?) users and their budgies and dogs, but each of these also is able, rightly so, to profit from their enterprise and participation in the whole.

itSMFI and the Chapters do something to promote ITIL Foundation Qualifications and so behaves similarly and should not be viewed differently I believe.

As for letting people know that 73% of itSMFI's income comes from this area, I don't see how we could avoid letting them know even if we wanted to, which we don't. Look at the pie chart on page 9 of the report - it's pretty Janet and John. I have no idea as to how many paying members know this fact without asking them the question first, do you? Have you?

Incidentally, without wishing to feed on anyone's (your) journalistic paranoia - but it's fun in any case - how do you know this is actually Keith speaking and not some ghoster? LOL

See you at the NZ conference hopefully...

potential conflict of interest

I did set you up with a verified user-id once...

yes sloppy terminology on my part: on the IQB, the itSMFI represents the qualifications user community, i.e. the people who pay for and sit certifications (after compulsory training). I think there is a potential conflict of interest in the majority of funding for that representative body coming from the vendors of certification.

it never ceases to amaze me Keith how little the punters care about the quality or governance of the training and certifications they buy. So many just seem to want the ticket. that doesn't make it right to lower standards of quality and governance in a professional industry.

Who are the punters?

I know we've been this way before but it is worth asking questions about who the punters are.

We aren't talking about a homogeneous mass here.

Undoubtedly there are some delegates who just want a piece of paper. Even those who want more are inevitability caught up in the need to pass the exam. However many times a tutor stands up and says "this isn't all about passing the exam" 95% of the delegates will be scared of failing it, and the tutor has a legitimate responsibility to get them through the exam. You might well question where the boundaries of that legitimate responsibility lie, however, and whether they are ever crossed. I believe they probably are crossed, with the best of intentions in some cases, and the worst in others.

Then there are the senior IT managers. What do they want? In a number of cases I've seen their legitimate needs for an intelligent and enabled workforce subverted to HR speak.

And then there is the "everybody needs to do it view" except, of course, Senior management.

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