Our panel of experts answers your IT
problems
As head of IT I have always had a great deal of autonomy and
feel that my department has provided an excellent service while
staying within budget. I have been told that an IT finance function
is to be set up under the aegis of the finance director to track
the value of IT services and projects in purely financial terms. Am
I right to see this as unrealistic and a betrayal of
trust?
Embrace the new approach and achieve dual
reporting
You are right to be concerned, although you would need to see
other indicators to consider this situation a betrayal of
trust.
Instead of considering the financial evaluation of projects and
services unrealistic, you would be wise to embrace this
approach.
IT managers who want to progress in their careers need to
demonstrate an ability to be business-oriented, and that includes
valuing services and assets in financial terms. In particular,
there may be a situation in your company that requires a major
focus on costs and, if so, you need to be proactive in this
area.
It will help if you achieve at least a dual reporting line so
that the new IT finance function is also responsible to you. This
will give you an opportunity both to learn and to demonstrate
leadership in this area.
If you are not comfortable with the financial aspects you should
consider taking a course for non-financial managers.
On the question of trust, it would be helpful to confirm that
both the end-users and their managers value your services. Adopt
some customer service and satisfaction metrics. These will also
help you provide an appropriate balance to the financially-based
approach that is now being adopted.
Sharm Manwani, Henley Management College
Help the new function to appreciate value over
spend
I suggest you welcome the new IT finance function and ensure it
is engaged fully with your team, is kept up to speed on technical
matters and, most of all, becomes a credible source of insight on
your organisation's IT needs, opportunities, costs and funding.
Enquire who wants the new IT finance function and why. The board
may want to establish independent expert control processes.
Governance processes have changed significantly in recent years;
today, extensive levels of autonomy are the exception.
This is also a good chance to confirm that users share your view
that they get excellent service.
Tracking the value of IT purely on financial terms is foolish.
Of equal importance is the capacity created. For example, £2m for
e-mail may seem high, but if this is 1p per mail and others pay 3p,
then focus your efforts elsewhere.
Similarly, cutting costs can be counterproductive. For example,
extending average PC usage from four years to five provides a 25%
reduction in deprecation and may save cash in the first year. But
this is folly unless associated impacts are considered, such as
supporting multiple operating systems, or delays from slow PCs.
Work closely with the IT finance function to help them
understand value over and above the expenditure.
Antony Smyth, Ernst & Young
Make sure you work on the same strategy and
tactics
You need to see the new IT finance function as a valuable
addition to your IT management framework, and personally make sure
you are all working on the same strategy and tactics.
From an overall strategy perspective, maximising the value the
company creates from investments in IT is now at the very heart of
successful IT strategies, so, far from being unrealistic, it is
essential.
If, as it sounds from your question, you have positioned the IT
department as a provider of services to everyone else, it will be
difficult for you to argue that you should have accountability for
the financing of IT and for the delivery of business value from IT
investments.
A company simply cannot hand this accountability to a provider,
even a very trusted one, so placing it in the finance function is
not a betrayal of trust but a recognition that to place it in IT
would give you a conflict of interests that you would find, as a
provider of the services being invested in, hard to reconcile.
What matters most is that the people who will be accountable for
this new piece of the strategic IT jigsaw have the knowledge to
make it succeed.
Accounting for investments in IT is relatively easy, but
identifying and maximising the real business value created as a
result of these investments needs specialised knowledge and
experience. As your company's most senior IT expert you are clearly
best placed to help the new function succeed.
Chris Potts, Dominic Barrow
Demonstrate the value of your existing
department
I think your question is a sign of the times: organisational
management is demanding proof of the delivery of IT value.
For too long IT has delivered applications and services the
benefits of which are lost in, or even claimed by, other functions.
Of course, one expects this as IT always works with business to
underpin business processes. Few IT applications provide benefit on
their own.
It seems to me you have little choice but to work with the
finance staff as any argument would simply confirm to them that you
do not deliver value, as you do not wish to be measured.
Why not take the opposite stance? Create a benefits assurance
group, and as it is similar to the finance group, have the two
groups work as one. Arrange for this group to work with business
management before approval of the intended applications and then
trace the delivery of the benefits on a quarterly basis. This
could, in effect, broaden the tracking of benefits beyond those
that are purely financial.
We have seen the outsourcing of many IT functions and I believe
this is in part connected to the perceived lack of value delivered
by incumbent IT groups. Make sure your department does not follow
this direction as outsourcing will be the next step.
In summary, go with the flow and begin to take ownership of
benefits delivery and assurance.
Chris Edwards, Cranfield School of Management
Consider specific areas of IT spending and work
together
Try not to view a business decision personally and as a betrayal
of trust but rather as a financial analysis exercise. As you
mentioned, you are providing an excellent service and this decision
will only serve to endorse your position.
Generally, IT investment should meet a range of criteria:
strategic, economic, technical, benefits realisation and risk
management. This includes:
Will the investment meet a business need? For instance will it
enable us to sell more?
- Are processes optimised to deliver maximum cost saving and
customer service?
- Do the business benefits warrant the level of investment
required?
- Will the proposed solution work - ie, is the technical
architecture viable and is the sourcing model developed to meet the
risk reward needs of the business?
- Is there a benefits realisation plan? Are individuals tasked
with ensuring tangible benefits are delivered?
- Are all the risks known, allocated and managed?
A robust business plan, which should be signed off by the
business should meet the above criteria. Remember that meeting a
budget does not necessarily mean that you are delivering good
return on investment.
As the finance function is responsible for the IT spend of the
organisation, monitoring mechanisms must be in place, and it is
right that the finance director is taking a closer look.
My advice is to ensure that your IT spending meets those areas
that I have listed and work with the finance director to give
consideration to these aspects.
Roger Rawlinson NCC Group
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The experts
Computer Weekly has put together a panel of experts whose
specialist knowledge you can draw on to solve a problem. E-mail
your questions (or your solution to this question) to
computer.weekly@rbi.co.uk
Cranfield School of
Management www.cranfield.ac.uk/som
Dominic
Barrow www.dominicbarrow.com
Ernst & Young www.ey.com
Henley Management
College www.henleymc.ac.uk
NCC Group
www.nccglobal.com