The Real World of IT Financing – A True Story
Inspired by recent projects being undertaken by cibsys, I started thinking about some war stories I have heard through the years. The following blog post looks at an example of what could and does go wrong if you don’t ask important questions about IT financials.
The outline of the story was to resolve an IT budget crisis, where the COO was forecasting 10% over, dealing with figures in excess of ten million. In other words, there was a pressing need for fast remedial action to prevent disaster. The regional CIO was a brilliant technical lead with fantastic ideas, who delivered amazing software surrounded by like-minded technical staff. The one lonely voice in his management team who was screaming to be heard was his business manager who could see the pending crisis of budget and funding but was not being listened to. The reality was that the forecast was way off, there was no real spend tracking and that the ledgers actuals were so far behind the reality of spend that no one really knew what was being spent and where the money was going. There was dire need for proper departmental financial controls and proper forecasting in addition to the basic ones in finance department.
The moral of the story is that good technologists are not always good business people – they think tech first and money later. The IT department tends to promote brilliant technologists above their level of competence and not all good technical people are able to manage money, budgets and people. To test this theory, ask all the boring questions about financials and financial processes. Relying on Finance to have tabs on IT is not enough, IT needs proper financial governance in the department with people in control who respect the bottom line.
My next entry will include a list of questions to ask IT departments when considering financial governance.