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Dear CFO – A Few IT Unspoken Rules!
Dan Salisbury / October 19, 2018As in the unspoken rules of baseball, IT has its own set of undocumented cultural norms. Many of these are clear within IT, but largely unknown to the larger business community, especially the CFO. Why would the CFO be interested in these abstruse principles? Perhaps because in many cases they result in unnecessary expense, delay, client dissatisfaction and opportunity cost! Make no mistake about it, IT is a crucial and loyal part of any business organization. However, understanding some of the key behaviors driving the IT organization and addressing these activities will be a bottom line boost to your company. So, let’s get into a few of those unspoken IT rules, shall we?
- IT organizations, much like HR and Finance functions, span the enterprise. Even more so than HR and Finance, IT individuals have access to sensitive information throughout the company. Personal files, browsing behaviors, financial information, phone discussions, client information, source code and many others elements of critical information are accessible. Of course, this information is sequestered, fire-walled, encrypted and password protected right? Well not always and perhaps not as thoroughly as the casual observer might expect. And in virtually all cases, someone in IT usually has access. The unwritten rule is such information is sacrosanct and extremely confidential but information is power. And every barrel has its rotten apples, even IT. Did you know it is estimated that over 70% of security breaches are internal? What is the solution you ask? There is no absolute guarantee of information confidentiality but a prudent CFO has a detailed security one-year plan and a three-year road-map which is overseen by a panel of diverse functional executives, includes an outside testing entity and incorporates significant internal random testing procedures.
- The majority of IT spending is investment in maintenance operations. Often 80-90% of an IT organization’s spend is buried in keeping the IT environment running smoothly. This leaves precious little for crucial technology and process innovation, both instrumental in defeating the real competition carefully courting your client base. Since much of the maintenance cost is tied up in multi-year vendor contracts, hardware and software purchases, IT maintenance labor and telecommunications costs, it appears difficult to put a dent in this spending, much less reduce costs. In addition, most of the IT people are deployed supporting this installed environment and the unwritten rule of this large constituency is don’t rock the boat. Since these people are the only real experts on how the IT environment operates, it is risky to overrule their guidance and warnings. Bold CIO’s of course realize this and do their utmost to incentivize obsolete retirement, contract re-negotiation, technology innovation and process re-engineering. The prudent CFO will help with this process by encouraging IT leadership and individual contributor rotation, creating incremental bonuses for significant cost savings in aging areas, and offer gain-sharing opportunities to outside experts to help the IT function economize and rationalize its operations. In addition, the CFO should sponsor a truly empowered IT leadership council made up of mostly non-IT executives who can demand fundamental changes to IT that will help the company grow profitably and safely.
- Facebook, Twitter, Google, Amazon and many other blockbuster companies are fundamentally IT companies. Your IT function has that same imagination and drive to invent wonderful solutions for your company, if you let them. The unwritten rule is every IT function already has its skunk work projects and razzle dazzle prototypes under construction and in some cases already built! Imagine turning that kind of inventiveness and passion towards some of the industry business challenges your company is already facing! Some of the smartest people in your company are in IT, usually supporting the antiquated infrastructure you use to create your fancy invoices or payroll checks. The enlightened CFO will reserve a significant amount of budgetary funds to hand to the top three renowned IT entrepreneurs already in your IT function, and tell them to go solve one or two of the company’s or industries major problems or better yet, unrealized opportunities. You will be positively stunned by what you unleash!