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May 15, 2018

If IT speaks in $$$, Finance will ‘get it’– and so will IT

If IT speaks in $, finance will get it and so will IT

Technology consultant Frost & Sullivan highlights that it is important for IT and finance leaders to fully understand one another, to “speak the same language,” so they can decide together which investments are best for the business.

Long gone are the days when IT and finance lived on different floors with occasional meetings fraught with territorial battles over resources. If enterprises are going to adapt to the speed of the idea economy and maintain their competitive edge, dev teams and ops teams need to collaborate to achieve competitive agility.

In a recent research paper, Frost & Sullivan highlights the differences between how IT managers normally think of investments in terms of budget and costs; primarily considering whether the approved budget can support a desired purchase, and how difficult it might be to request additional funding.

32% of IT decision makers surveyed by Frost & Sullivan cite “acquiring budget” as the top challenge to implementing IT transformation initiatives, with this perspective often fuelled by common myths regarding IT financial decisions. Such myths – which could be overcome through a closer relationship between developers and operations include the following:

  • Myth 1: CFOs just want to cut costs and not spend money. This isn’t true: It’s the CFO’s job to spend the company’s money wisely to achieve the best possible results. Communicating how an investment will deliver value for the business will help get the CFO on IT’s side
  • Myth 2: OpEx is more important than CapEx. Again – not true. While OpEx may be more flexible than CapEx, any proposal that is clear on what and how much value is delivered should be considered.
  • Myth 3: Leasing is better than ownership. Wrong again – not least because there are so many differing leasing and ownership variations in the market that it’s easy to find an innovative usage-based payment option that provides flexible ownership terms.
  • Myth 4: Everything’s moving to cloud, so there’s no point in data centre investment. This one’s not true because enterprises are choosing hybrid models, with the likes of critical financial workloads and sensitive databases remaining in premises-based data-centres for the near future.
  • Myth 5: Public cloud is the cheapest option for running a workload. While on-demand pay-per-use cloud will have a place in nearly every company’s future, operating costs vary on differing workload requirements. Being clear about the costs to run different workloads in various environment and deployment models will make and investment case more compelling to the CFO.
  • Myth 6: Public cloud eliminates management and administrative costs. It’s true that every service, no matter where it’s found, needs to be managed. Frost & Sullivan found that 61% of IT decision makers estimate that for every $1 they spend on IaaS, they spend more than $3 on managing that service. Finding ways to manage flexible staff to maintain optimal infrastructure is key to managing this element.

The research paper suggests three tenets for IT and finance to better engage with one another: accept that change is a constant, that hybrid is a way of life, and that the enterprise must retain control over IT resources, because in a digital world, no matter your industry, technology is embedded in business.

Simply put, understanding the strengths and challenges posed by each type of infrastructure in meeting your business goals can help you build a business case that both the IT and the finance organisations can support. Identify your primary business goals, and calculate the value contributed by each infrastructure type.

 

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