IT Needs Its Own 'Numbers Guy' to Help Illustrate Value

Ann All

IT professionals are often seen as "tech guys" (or girls), and we hear over and over again that what IT needs is more "business guys" (and girls). But maybe we also need subcategories within the business/IT blend, much as we see in the broader business world. (You know, there's the "numbers guy," "the vision guy," "the execution expert," "the schmoozer," etc.)

 

One idea I think makes a lot of sense is appointing an internal CFO within the IT department to make IT spending more transparent and to ensure companies get maximum efficiency for their money. It was one of the suggestions included in a CIOUpdate article I wrote about earlier this year, attributed to Bud Mathaisel, SVP and CIO of outsourcing provider Achievo Corp. Many factors speak to the need for such a person, including the hefty amount some companies spend on IT, the limited visibility into IT spending that many of them experience and their desire for better returns on their IT investments.

 

At Nationwide Insurance, Bill Miller's official title is associate VP of IT finance, and he serves as the CFO office's liaison for IT. In an interview with InformationWeek editor Chris Murphy, Millers says IT needs a dedicated finance specialist because "its cost drivers aren't necessarily one-to-one drivers to traditional business cost drivers." As an example, computing costs might not go up with an increase in business, though digital storage costs likely will.

 

The key, Miller says, is for IT to illustrate how its expenses contribute to specific business improvements. He said:

You can't offer that equation if you don't run your IT business to say what IT's costs and drivers are.

At companies that lack visibility into IT spending, IT becomes "a black hole cost center," Miller said. These organizations are more likely to be downsized or outsourced because "the company's only goal is to make you cheaper."

 


Shedding more light on IT spending and delving into details can help companies make decisions that may seem counterintuitive at first, but will save them money. According to another InformationWeek article, when Emerson consolidated 135 data centers across the United States into a mega-facility in St. Louis, it decided to break from commonly accepted practice and put the building's heat exchangers on the roof directly over the air-conditioning units they support. This allows Emerson to take a modular approach to expansion, adding cooling space only as needed as it shuts down and incorporates other centers into the central facility.

 

If the exchangers were installed in the ground behind the building, as is standard practice, the company would have to dig up the ground to lay pipe for each installation. This approach would have required buying all the gear up front and laying copper pipe underground for it, even though exchangers would come online over a period of years as other data centers were shut down. Emerson is already saving money on cooling costs at the center and didn't need to buy 2.5 miles of copper pipe.

 

Miller is also quoted in this article, saying IT must "expose the business to the economics of IT in a way that makes sense and is understandable to them." For instance, business leaders who insist on a highly redundant (and expensive) server and storage system for all applications may change their minds when they are shown that some apps aren't critical enough to merit the added cost. Said Miller:

It's not a cost pressure. It's a value pressure. You spend more if there is value in the investment. Companies that don't understand that relationship flat out aren't making it in any industry they're in.

I got a similar take from Michael Harris, president of David Consulting Group and one of three authors of a book titled "The Business Value of IT: Managing Risks, Optimizing Performance and Measuring Results," when I interviewed him in April. In addition, he said, IT needs to be more cognizant of business priorities. (And someone like Miller can help that happen.) Said Harris:

It's all about response to change. The business is all about giving its customers what they want, when they want it. Often IT is about that as well, in good organizations. But in bad organizations, IT is about persuading the business to give it enough money to build the latest technical whiz thing on the market and give it as much time as it wants to do it. Anything less than that is seen as shortsighted.

Harris suggests conducting regular strategic reviews in which the business and IT determine which business lines are in investment mode and which are in cost mode. Thus, said Harris, IT "needs to plan each implementation it does knowing that in each strategic time period, it might change from being in investment mode to being in cost mode."



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