IT infrastructure funding: How to melt your CFO's heart
Anyone who has ever worked in a large organization knows technology and finance teams sometimes find themselves at loggerheads. CTOs feel the “bean counters” don’t really understand what they’re trying to do, and CFOs bristle when asked to write checks for projects with no clear end date or ROI. It’s a recipe for conflict that can ultimately limit a company’s ability to innovate.
In the decades since computers became a staple of the business world, no one has actually managed to fix this seemingly intractable communication problem. But industry analyst Frost & Sullivan may have cracked the code, or at least identified they key areas that need improvement.
A recent brief, Infrastructure Economics: What IT Leaders Can Learn from the CFO Organization (and Vice Versa), addresses recent changes in modern IT and finance departments and offers helpful hints on how they can better understand each other’s perspectives and improve collaboration. The report teaches both sides how to speak the same language to reduce misunderstandings and distrust. It debunks six common myths about IT and finance, and provides key talking points for the two departments to start discussions on future IT investments (you can read those talking points here).
Apps are driving change
The paper also elaborates on top-line cost elements for three infrastructure options: traditional IT, public cloud, and composable infrastructure, a new category of infrastructure that turns computing, storage, and networking into fluid pools of resources that can be assembled or disassembled on the fly under the control of software-defined intelligence and a unified API.
This is a critically important concept for any organization that is looking to get its CFO and CTO on the same page, because software development today works very differently than it did even five years ago. Back in the old days -- remember 2012? -- technologies took years to implement, and the costs were often indecipherable to finance departments. Not surprisingly, nervous CFOs constantly hounded their technology counterparts to figure out if the money being spent every day was generating any real benefit. In response, technology decision-makers would often ignore the finance people while muttering under their breaths, “We’ve got this. Get off our backs.”
In that world, IT was the cost center, and finance teams treated technology costs like any other expenditure. But then a funny thing happened: apps and agile development grew up. All of a sudden, major technology changes could be completed in weeks or months rather than years. For the first time it was possible to assess success (and failure) without having to wait for results to trickle in. Apps -- and other tools that accelerate development -- proved to be the “truth serum” for large organizations. Either they worked quickly, or they didn’t work at all.
The advent of faster development environments, including apps, has been a gift to business in many ways. One benefit is that everyone who’s even a little tech savvy can understand how an app works. Modular software that you can effectively “plug in” and “unplug” from a system is much more approachable to laymen than previous software types that required careful and elaborate changes to a firm’s entire architecture and long implementation times, and no guaranteed ROI. Just using the word “app” makes people more comfortable, as teams outside of tech can understand the basics of installing, trying out, and deciding upon an app.
Increasingly, organizations are beginning to develop more enterprise apps, understanding the technology’s potential to improve employee efficiency and productivity. Of course, a business adopting or creating an app is much more complex than a Millennial going to the App Store and downloading Instagram, but the basic principle remains the same.
It's easier to tell a finance team that you need to integrate an app, versus redesigning the company's IT infrastructure to make room for important new functionality. The process of integrating an app is much faster, less potentially disruptive to how the company currently operates, and is much easier to reverse if the results are anemic. Apps in general represent convenience and accessibility, and are much easier to discuss across team lines than complex software overhauls.
Leveraging the language of apps
So how can a technology lead use this app development approach to convince a CFO to loosen the purse strings for an important project? First, it is necessary to understand the main disconnect between tech and finance leaders. Although the stereotype has IT asking for a blank check and finance refusing, the truth is that a CFO is usually okay with spending money if he or she understands where it’s going and what the result will be.
This is why apps are so useful: they make tech approachable for the people who pay for it. For starters, apps (as well as other tools such as lifecycle management software) don’t require any changes to existing technology. That’s a huge advantage, because it minimizes potential outages and breaches and won’t interrupt ongoing operations. In addition, apps sidestep the need to spend time and money on integration – the bane of every IT professional’s existence.
Most importantly, apps let technologists speak a language that finance teams like, such as “this quarter” and “fully rolled out in four months” -- words that tend to resonate better than “sometime next year.”
These tight development timelines let technologists create tangible metrics for success rather than amorphous goals, making “tech talk” a lot closer to “finance talk.” CTOs are now using apps not only to solve their technical problems, but also to drive business value. And this fast failure/fast success model dovetails with how finance people think. After all, they just want answers -- and they usually want them quickly.
According to the Frost & Sullivan report, “IT organizations that once focused primarily on asset management now take responsibility for achieving strategic business goals. At the same time, line-of business employees have greater influence over technology decisions and purchases.” With that in mind, here are a few ways for technology leaders to leverage today’s fast development cycles to get a project fully funded:
- Define the scope of the project as tightly as possible: The financial team should understand exactly what the tech team wants to do in the simplest terms possible. That means setting out a full list of deliverables. The language around apps should make this much easier than trying to explain large-scale engineering projects to non-engineers.
- Keep the time frame short: A CFO has much less of a problem signing off on a three- or six-month project than one that’s slated to be completed two years down the line. If necessary, break a larger project into more palatable chunks, making sure each segment has its own ROI.
- Define success: Use the accessible language of the app economy to lay out the proposed return on investment in a way that’s clear and desirable. The project should be clear, quick, and pay immediate dividends.
Making CFOs and CTOs happy
Top innovators know that data are what drive digital transformation. By reducing technology deployments from nine months to one month, IT teams can not only sweep away the veil of secrecy that perplexes CFOs, they can also get valuable feedback and learning as the app is developed and rolled out. That’s a far cry from having to wait up to 18 months to get a single piece of feedback.
It’s why fast development tools and apps are driving the economy today and making CFOs and CTOs very happy. These technologies empower developers to get results in record time while at the same time generating data to enable CFOs to determine whether technology investments are bearing fruit.
Finance and IT departments may never truly understand each other because they ultimately have two different worldviews. But as the time and cost of development drops, finance teams can feel more confident that they are making smart investments that will drive innovation and profitability. That’s a concept that everyone can understand.
Helping IT talk to finance: Lessons for Leaders
- Time-consuming and expensive projects can drive a wedge between a company’s finance and technology leads: the more time and money it takes to implement a new technology, the more finance will demand concrete end dates and proof of ROI from engineers.
- When implementing important changes, companies must encourage trust and communication between teams.
- Switching to apps smooths the relationship between money and tech as adoption is much faster, eliminating the need for IT to hide its process as time goes by and worries mount.
- Apps are modular, simple to integrate, and show results (or a lack thereof) quickly. An underperforming app can be removed painlessly, making the adoption of apps an easier sell to finance.