I have nothing against chief financial officers. It's a tough position with a lot of pressures that can easily be misunderstood. That being said, it is the money people who generally stand in the way of engineers and technologists and the spending required to accomplish great things with IT.
It is a common problem we all have-dealing with accounting, the CFO or other non-IT management. They don't understand why $29 billion is collectively used to power and cool IT infrastructure.
So we walk away with the feeling they simply don't get IT. But some of the problem belongs with us-we don't communicate in the language of the CFO. And because we don't, we shouldn't act surprised when we get pushback on spending requests.
Here are areas where we, as the promoters of IT, can begin to communicate better with the CFO.
Think TCO, not ROI. Traditional ROI thinking won't work anymore for us. To the CFO, return on investment is how much money you're going to give back to the company. Let's face it. Most IT projects-no matter how compelling-don't bring return to the organization like an additional sales person, a new marketing campaign or a new product launch. Discuss projects with CFOs in terms of total cost of ownership (TCO). IT projects are overhead. You get over this by demonstrating fiscal stewardship by showing that you are providing the lowest cost. To do that you must provide options, comparisons, case studies and examples.
Clouds. CFOs like what they hear about cloud computing as a cost saver. Don't fight them on it. You can leverage what they are hearing in order to steer cloud spending on the right IT projects.
Green IT. For all the talk about green IT, are you not surprised that for CFOs it still has nothing to do with the environment? The reality is no green projects exist unless they have a better TCO. You can forget about there being a market to pay a premium for green IT.
Virtualize, Virtualize and Virtualize. This subject takes up three spots because there are three key virtualization targets: servers, desktop and storage. But again, the key here is how to justify and how now not to justify.
Let's start with server virtualization. It's the easiest to justify TCO-wise. The challenge is to provide accurate savings estimates up-front. In other words, don't guess as to the savings. Run a formal assessment before asking for funds. Collect real-world usage statistics to build an accurate business case.
Desktop virtualization projects usually require a multiyear business case. It's tough to justify a full-scale VDI program in the first year because of the up-front capital expenses. But VDI can extend the typical three-year desktop refresh cycle, reduce operating costs for support, maintenance and upgrades, and reduce subsequent year capital expenditures.
Adopt IT-Centric Business Continuity. Three major concepts (risk management, disaster recovery and business continuity) have become blurred over the years because the responsibility of planning has been foisted upon IT leadership without the explicit participation of business leadership.
This needs to change. And the change can come about by the adoption of new planning for business continuity that is IT-centric. By adding a couple of critical steps in the planning process line, the overwhelming burden of IT leadership to determine which business units are most important, what priorities should exist after a disaster, and how to ensure business continuity is removed.
Proactive Cost Reduction. DuPont is like a lot of big companies that learned the hard way. Organizations that retain documents beyond required retention periods will face higher costs and greater risks should that information be subject to discovery. So DuPont did a three-year internal study of document discovery requests. They learned that in three years, 75 million pages of text were reviewed. They also learned that 50% of the documents that were reviewed were kept beyond their required retention period. DuPont estimated the cost of reviewing documents past their retention periods was $12 million. For this particular example, e-mail archiving is a good way to demonstrate to CFOs that IT can be proactive in cutting costs.
Reduce Data Center Costs. Modular data centers are becoming a way to cut costs. Google and other major players are starting to look to this model to avoid building and construction costs. The use of managed or hosted services should be another consideration.
While the relationship between the chief financial officer and chief information officer can sometimes have more debits than credits, it is definitely worth the investment in time and effort to highlight IT projects in terms the CFO will understand. This means working hard to determine the full financial impact of your programs, demonstrating that you are looking at the total cost of ownership, and considering the company-wide financial impact of your projects. If you can successfully strengthen the relationship between you and your CFO the return on investment-excuse me-I mean the total cost of ownership can be stunning.
Irwin Teodoro is director of engineering, systems integration for Laurus Technologies. He can be reached at 630-875-9200 or ?email@example.com