I snapped the picture on the left out of sheer frustration while attending a technology exhibition. I was walking past the big wall of kit when I overheard the group of people animatedly debating the pros and cons of the kit it contained.
So why was I frustrated?
This was a group of senior IT guys in suits – probably all on high six figure salaries – talking about adding more hardware to their existing empires. They were (figuratively) salivating like kids in a sweet shop without adult supervision.
In my personal opinion, this is the WRONG conversation for senior IT professionals to be having these days. Computing resources have reached utility status and unless your business is providing utility computing to other organisations, you should be focussing on consuming it “as a service” from someone else and not adding more hardware to your existing estate.
Finance as Advisors in Technology?
There is an important role for finance professionals to play in steering, leading and encouraging these conversations by understanding the implications and impacts of adopting an “as a service” / “cloud” based approach. From a high-level balance sheet perspective, your costs obviously move from capital to expense – but more importantly the costs can be directly related to revenue – by dialling resource up and down according to demand.
Back in 2015, the CIO of Deutsche Bank announced an aggressive 5 year plan to reduce “technical debt” by migrating 80% of its services to the cloud, removing €800 million of costs in the process – something I’m sure would be music to the ears of any finance professional.
The discipline of “IT Business Management” (ITBM) rose in popularity in recent years as IT departments realised the importance of correctly allocating computer costs to the departments, services and applications using them. I have heard countless stories from IT professionals who have successfully implemented ITBM platforms and finally achieved the granularity of cost apportionment that has enabled them to instigate serious business conversations regarding service provision. In one case, the IT team discovered that a particularly complicated network of servers and switches that were consuming a disproportionate amount of resource existed solely for the benefit of a single client that remained from what was once a profitable service used by multiple clients but where the revenue now generated from single client had for a long time not nearly covered the costs of providing the service. What surprised me in the above instance was that the finance department hadn’t previously been pushing for this level of cost transparency from the IT department and was simply apportioning all IT costs across all services – in this day and age, greater granularity in cost apportionment can be a key factor in determining service costs and profitability and should be something all finance professionals are striving for (demanding) from their IT department.
Efficiency Driving Tech Spend
Finance professionals should also be collaborating with their IT department in transforming the way the modern business leverages technology to function more efficiently. “Quantified health” was a hot topic a few years ago when the world went mad with everyone attaching fitness trackers to themselves to gain a better understanding of the relationship between activity and health. These days, the Internet of Things (IoT) – more specifically the “Internet of YOUR BUSINESS Things” – can provide a rich source of data that enables the “Quantified Enterprise” to become a reality and improve the financial fitness of the organisation.
Artificial Intelligence (AI) is another hot topic today that should be on the radar of every finance professional looking to drive cost reductions through efficiency gains for example from “Robotic Process Automation” (RPA) of mundane tasks like automating purchase order processing and invoice payments. The Economist reports that McKinsey estimates organisations will derive $1.3 – £2 trillion economic value per year through using AI in supply chains and manufacturing and goes on to outline where finance departments are using AI for demand planning and forecasting as far out as 18 months in some cases. Now that’s one crystal ball I’d like to get my hands on!
There are many further opportunities to drive productivity and profitability through the application of technology for those finance professionals that are willing to embrace change and collaborate with their IT department to explore the “art of the possible”.
Whatever you do, please, just get them out of the picture above …….. J
About the Author
Best known for his work as an “Innovation Catalyst”, Andrew Vorster is the former VP of Technology R&D at Visa Europe who now spends the bulk of his time tracking changes in TIPS – Technologies, Innovations, Patents and Startups, contemplating the impacts and implications these will have on society, industry and the individuals within. Weaving these into credible and colourful narratives, he inspires audiences and clients to explore multiple possible futures in order to inform strategy and create their own story of the future before they read about it as history made by someone else.
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