Beancounters: Friend or Foe? Finance & IT

A Sutcliffe Consultant, APS-IT (Former IT Manager for several SME operations) (a.k.a Bottman)

Common beliefs

•  “… setting a budget means you are forced to overspend most of the time and are likely unable to leverage strategic opportunity at others…”

• “The CFO just wants to stop me spending money and doesn’t care what problems this causes the IT department ”

• “… finance people don’t understand technology, so why should they control what we do?”

• “I seem to spend a lot time trying to justify spending small amounts of money, when other departments seem to spend what they like”

• “Our FD knows the price of everything and the value of nothing”

The Reality

•  Most companies are not “IT businesses”; and IT is about delivering a service to the rest of the organisation, not about the technology

•  The Business Strategy has to take precedence over IT Strategy

•  Different departments should actually have the same goals (really!)

•  Finance have a lot of pressure on them to make the books balance

•  Budgets will always be limited; the trick is to do the most with what you have

The Reality

•  If the business people don’t understand the importance of the technology

•  you probably haven’t explained it in terms that they can understand

•  If you can’t explain it to them satisfactorily, you should ask if you really understand the significance of what you are proposing

•  It’s not their role to understand; it’s your job to explain

IT Strategy

•  How to use an IT Strategy (you do have one, right?) •  If you don’t have a clear destination, how will you know when

you reach it? •  The IT Strategy should indicate how IT will help the business

achieve the business goals •  This requires understanding what each department plans to do •  It should be updated each year •  Although the master document should be detailed, there

should also be bullet points that fit on a single A4 sheet of paper

IT Strategy

•  To achieve this, you have to talk to the various departments •  You have to know what is going on in the business in the next few years

•  You need to know what the various departments are planning

•  You have to understand what pressures they are facing

IT Strategy

•  Detail of Strategy •  Break down by appropriate sections, departments, technology

•  Then use this to create a bullet point summary to issue to Senior Mangers

IT Strategy

•  Example of bullet point summary •  For 2015

•  Replace 20 PCs & 5 printers •  Replace 3 laptops (Sales dept.) •  Obtain 10 new licences for MS Office suite •  Renew the company’s Mobile phone contract •  Review the backup processes; either renew existing software or replace •  Replace drives on Server •  Conduct training on product XXX •  Replacement of 4 damaged telephone handsets (Logistics)

IT Budget

•  Create a budget plan •  Show previous years’ expenditure to justify repeat figures •  Include any project details •  Use a logical separation •  Consider using colours like to show key items

•  Know the difference between Capital Expenditure (CapEx) and Operational Expenditure (OpEx)

IT Budget

•  Use actual expenditure to create a forecast •  Some costs will be repeated (OpEX)

•  Some costs will be one-offs (CapEx) or projects

•  Don’t forget to allow for over spend

IT Budget

•  Use 1, 2 & 5 year plans to manage the finances •  You have to plan for next year

•  But it makes no sense to spend money next year, only to replace that same technology the year after

•  You can’t predict what challenges you face more than 5 years from now

Show Me The Money!

•  Persuade the head Bean Counter that you •  Can be trusted to plan

•  Know how to accurately forecast expenditure

•  Will be careful how you spend the money

•  Will treat it as your own!

•  They will then open their wallets!

Business Case Justification

•  Pounds and pence •  Business leaders don’t talk “Tech” – there is no point in trying to explain things this way

•  Cash benefits make more sense to them

•  They need to know •  What it will cost

•  What it will save

Management priorities

•  All managers have the same 3 goals •  To increase sales

•  To cut costs

•  To improve profit margins

•  That includes IT Managers!

The art of negotiation

•  Be honest and upfront •  Don’t be afraid to say “That’s not what I can afford to pay”

•  Haggle every time

•  Be flexible over key details

•  It’s not always about the costs; some times, you can get extra value

•  Make use of quarterly / annual sales quotas to get the best deal

Thank you for your attention!