Bridging the IT/Finance Gap

February 22, 2008

Jeff Heynen, the Directing Analyst for Broadband and IPTV, Infonetics Research, says that if IT folks want full equality, they’ll have to do more than repeat vendors’ talking points. The point is that both the number and breathe of changes are increasing. Knowing how a change or rollout will impact an organization technically is simply no longer enough.

IT-Finance: Is there a disconnect between IT and the financial side of the business?

Jeff Heynen, Directing Analyst for Broadband and IPTV, Infonetics Research: I think there’s always been a disconnect. There are very few companies that get it right, but the vast majority still are trying to find a way to bridge that gap. Fundamentally, it’s an understanding gap. What software, secure application does that workforce need versus cost and time-to-revenue? What is the increase in productivity? The fundamental metrics for IT and the CIO versus the CFO and finance in many cases is absolutely divergent. For a CFO whose job is to wring the most cost out and make his business as efficient as possible is not necessarily the same goal that the IT person has, particularly when it person has hundreds of requests for CRM systems and for other tools to increase productivity. It is different looking at the balance sheet for top line revenue growth while the CFO is looking to streamline the bottom line.

IT-Finance: The differences between the choices are greater than the differences between options a decade ago.

Heynen: Absolutely, not only the total number of choices, but the categories of choices. [For example,] when it comes to communications services, physical layer connections, will it be TDM or will it be Ethernet, which can handle voice and data on the same pipe? That’s the basic question. Obviously, there are costs associated with that. The next step up: What are apps that I can run on these various types of connections? What is the security guarantees and how much downtime do I expect? If it is carrier Ethernet and the reliability is not the same, how much downtime do I risk versus how much less I pay per month? All these things have to be weighed. Ask an engineer, it is a series of trade offs. There is not one perfect answer.

IT-Finance: So the changes and extended choices are coming in waves that are increasingly difficult to keep up with.

Heynen: [In the past,] you plugged in either a PBX for voice or Centrex. Now there still are those option, but there also are IP PBXes. There is VoIP from the phone providers and voice and data from cable providers, because they going after SMEs as well. The choices are expanding tremendously.

IT-Finance: So on what basis does the IT department get the financial people to accept new technology?

Heynen: That’s the fundamental question IT has to ask: Suppose I want to make a business case for unified communications, for example. The person pinging you for that application most likely is in the mobile workforce. So the IT person sees that the benefit is being able to reach the mobile workforce any place or time. That’s all good and well on paper for the CFO. The question is what this does in terms of revenue. How does it improve the bottom line? The idea is that instead of playing phone tag for the customer to get on the line immediately, how much revenue in respect to cost deploy it across the entire network. Other questions may be whether to give it to only one group. Perhaps sales and customer service needs access to UC, but perhaps finance doesn’t need it. These are the types of variable that the IT person has to think about. There is not necessarily thinking about the tangible impact itself, but what the finance impact may be. That’s the kind of terms you have to speak to CFO with

IT-Finance: How should the IT person approach this?

Heynen: I think what happens that in a lot of cases, vendor come in pitch to IT person or go to CFO and he says, “Go to the IT person and talk to him.” At that point, the IT person will want to make a business case to take some action. He just can’t regurgitate [the talking points to the CFO]. He has to do his homework on his own and see if it is worthwhile. He will tell the CFO is his vote is yea or nay to the project. The onus is on the IT person because they have the fundamental technical knowledge that the finance person does not have. He’s the one who is going to have to translate and explain the business value to the finance people.

IT-Finance: Is the IT side doing that?

Heynen: I think probably a growing number of businesses IT people and CIO can do that but, overall, the percentage is fairly low. It’s a ques-tion of time. The whole CIO position, for example, only came up in last five to 10 years, with all the changes ongoing in communication services and applications. It’s a position and a body of knowledge that has to be ingrained for 10, 15 or 20 years before it is critical to every business. This is why Accenture and IBM and the like are doing tremendous business. Consultants are helping large companies bridge this communications gap.

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