SECRETS & LIES
Ten things your IT manager may be thinking - but will probably never tell you.
By Tony Sitathan & John Goff

It's 4:03 in the afternoon, and you're knee-deep in yet another crucial technology meeting. This time, the debate centers on switched backbone technology, and whether your company should upgrade to asynchronous transfer mode switching or install a network with wire speed, packet-by-packet routing. The network vendors go over the final clips of their detailed presentations. Crucial questions cross your mind: How much is this really going to cost us? Can I accurately measure the return on this investment? Did I really five-putt Number 12 yesterday?

As the techno-babble drones on, you steal a look at the other senior managers in attendance. Your chief information officer (CIO) is in a state of rapt attention, nodding her head with every buzzword. She speaks this language, this is her world. In another part of the room, the company's vice president of operations has lapsed into a stage of inner tranquillity. That, or he's asleep. Two seats over, your CEO is taking copious notes. Further inspection shows that they are, in fact, doodles of a race car.

And you, well ... you forgot to bring Network Switches For Dummies to this meeting, so you're pretty much at sea. All you really know is that you need to understand this stuff. Somehow, you must figure out how to ignore the vendor hype, bypass the buzzwords and get right to the heart of the matter. As one CFO bluntly put it: "All the technological jargon and powerful IT messages won't get me to open my purse strings unless I see the benefit of deploying and implementing technology for the general good of the company."

Easier said than done. Getting a true fix on the benefits of complex technologies ranks among the toughest challenges facing CFOs in Asia. The often contentious relationship between finance and IT departments doesn't help matters. Charles Wang, the CEO of Computer Associates International, is a pioneer in setting up exchange programs between chief information officers and senior executives. Wang's program was intended to help top managers better understand the role of technology in their business. Interestingly, Wang believes that, of all corporate decision-makers, CFOs should be the first to understand technology issues - and how they relate to their businesses. "CFOs are the most important gatekeepers to help the company avoid incremental costs," Wang argues. "If the CFO philosophically picks the wrong technology, the company will end up spending more on recurring costs rebuilding the IT framework than on concentrating on its business."

In other words, you need to get it right. To do that, however, finance managers have little choice but to rely on advice, particularly advice from their IT staff. A good IT manager or CIO can be a godsend - helping the CFO keep the company technologically up-to-date and strategically on-target. Finance managers say successful partnering with the IT department dramatically increases a company's operating efficiencies and, ultimately, drives up profits.

Unfortunately, such a partnering rarely happens. The sad truth is, IT heads often see the finance director as little more than a calculator-toting, budget-slashing, numbers cop. This view, while less than flattering, is somewhat understandable. IT managers at most companies must get the approval of their CFO for any sizeable projects or purchases. That alone can create an us-versus-them mentality. In addition, the CFO has the pleasant chore of riding herd on a company's costs and expenditures - a task that can quickly turn a finance director into an unwelcome visitor in the company computer room. What's more, CIOs often view finance managers as technological nabobs, or worse, Luddites. Katharine Paine, founder of the Delahaye Group, a corporate image and public relations firm, says many finance managers do little to undercut that image. "You know IT is there, but you really hate to open the door to see how it's doing."

This adversarial relationship doesn't do a whole lot for company morale. It may also explain why some CFOs say they don't always feel like they're getting the full scoop from their IT departments. Says an exasperated CFO in Singapore: "I just get the feeling they're not always telling me everything."

In truth, some things you're better off not knowing, such as the inner workings of a complicated piece of supply-chain software. What's more, consultants note that most IT managers are trained in technology, not communications. In addition, CIOs are generally being pulled in about eight different directions by different departments, which puts a real premium on their time.

The result is that CFOs aren't always told what they need to be told, and thus, don't always know what they need to know. To help fill that information gap, CFO Asia did a series of interviews with CFOs, IT managers, and consultants in the region. The thrust of the questioning was simple: what types of information do CIOs typically not reveal to finance managers? The answers, however, may surprise you. Here then: ten things your IT manager may well be thinking - but will probably never tell you.

1 "Our existing technology is just fine."

According to a manager at a large enterprise resource planning (ERP) vendor in Singapore, IT staff often recommend software that requires a great deal of development. Why? The less functional the software, the more control the IT department wields. "Application software with comprehensive functionality is seen as a threat to their importance - and even their own skill development," he explains.

Not surprisingly, CFOs should examine requests for new software with all the care of a jeweller cutting the Hope Diamond. More often than not, a company's existing software still has plenty of life left in it. Upgrading to new software also means your IT staff is going to spend time fiddling with that software - rather than focusing on the operation of your existing network. Remember, an ill-behaved e-mail system can cause just about as much damage as any of your so-called mission critical systems.

Hardware is no different. IT heads are notorious for constantly clamoring for faster, more powerful computers. Says the Singapore-based CFO of a French company: "Imagine my surprise when, after looking through the budgets for the new fiscal year and after signing off on them, the IS department wanted to switch midway by rolling out enhancements to the older system."

The experts' advice: just say no.

2 "We don't need that much money for this project."

Often, a company's IT head will come in with an expensive project, fully expecting to cow the CFO with a dazzling display of technological know-how. Further, the CIO will often punctuate the pitch by stressing that "all of our competitors are already doing this." Once the CFO has been convinced of the dire need for new technology, all discussions of costs take a back seat.

Therefore, experts say diligent CFOs can almost always find fat in IT rollouts. Take the case of the vice-president of banking and finance of a major commercial bank in Indonesia. Recently, the finance manager was told by his IT head that the company needed to move its entire banking operations to a Windows NT platform. But the finance manager worried that a change to a new network operating system would reduce some of the company's Unix servers to relics. Also, he questioned whether NT would be the ideal platform for some of the company's back-end systems. Eventually, the finance manager sought advice from an IT consultancy. In the end, the company did move some of its newer systems to NT, but it also left some of its legacy systems intact. The reduced rollout cost hundreds of thousands of dollars less than the original IT forecast.

3 "We can benchmark the cost/performance of the IT function."

IT heads are not always thrilled with the idea of benchmarking their department's performance. Naturally, a poor score does not reflect well on their management skills. What's more, CIOs seem even less eager to offer a cost-benefit analysis for proposed procurements.Paresh Chugh, a project leader for sales and research equities technology at Donaldson, Lufkin &Jenrette Asia, reasons that IT managers don't feel a need to benchmark or conduct suitability tests because they already have their minds made up about what they require for their own needs. Costs, he says, don't really enter into it.

Therefore, CFOs should demand that CIOs assess the total cost of ownership and return on investment for any potential purchase. While both figures can be nearly impossible to pin down, they at least give the CFO a ballpark figure of how much company management will have to lay out for a purchase, and what the benefit of that investment will be. In addition, finance managers might consider verifying these results with an independent consultancy. Companies like the Gartner Group, Horowitz Group, Meta Group and the National Science Technology Labs (NSTL) all do benchmarking on total cost of ownership and performance compatibility.

4 "The problem lies in the administration of the system, not the system itself."

Sometimes, a company's IT manager starts spending a good deal of time on bigger picture issues, such as wide-area computing, e-commerce and enterprise resource planning. While this is generally a good thing - you want your best IT brains working on strategic issues - it also means the actual operation of a company's network is often left to less capable lieutenants. This can spell trouble, particularly if network performance begins to suffer. When confronted, however, IT staffers tend to soft pedal network disruptions, explaining that there's a "problem with the system."

The truth is, blaming the "system" is the IT equivalent of saying your dog ate your homework. If your IT head repeatedly claims network disruptions are caused by "the system," you need to ask yourself if you've got the right person running your network. The smooth operation of a corporate network should be the top priority of any IT staff. If a company experiences a drop-off in network performance or an out-and-out crash, a good IT director tracks down the problem, then fixes it. A bad IT head blames it on the system, rather than the real problem - the administrator of the system.

5 "This product may help me, but it won't make the company any better."

Remarkably, when it comes to buying new software, IT needs tend to take precedence over the application's suitability for the task. "IT persons are comfortable with certain technologies - like a particular database or operating system or hardware," concedes an experienced IT manager from a large multinational company in Hong Kong, "and that drives the decision process." What's more, some CIOs have been known to recommend the purchase of a particular software solely so they can become experts in that software. Indeed, whole IT staffs have reportedly left companies once they became proficient in ERP software from maker SAP.

Ominously, Delahaye's Paine says that overdependence on a single solution often can have disastrous consequences. "We've moved entire operations to one platform, even though it was the wrong platform and [it] died off soon after we made the move." Paine's solution? Going out of house. "We've solved this problem by outsourcing the IT management function, so that our CIO is a hired consultant who first looks at our business needs, and then comes up with a solution."

6 "This project actually has little business value."

Not surprisingly, some IT managers see the world through IT-colored glasses. These CIOs focus on cutting-edge technology - technology that will no doubt make the IT staffers very happy. Whether the technology will actually plump up a company's bottom line ... well, that's another matter. "CFOs need to judge whether the proposal ties in to company objectives or has added advantages to the company," cautions Lim Leong Kiat, who oversees both finance and IT for the Singapore-based Cathay Organisation. At the same time, Lim warns that CFOs should not reduce all IT projects to mere short-term numbers. "Look at the Internet today. Every CFO mustbe aware of the growing importance of the Internet and how it can be used to create awareness among customers and buyers."

A contradiction? Hardly. Balancing financial responsibility with long-term goals is an essential part of a CFO's job. Says Lim: "Ultimately the CFO is responsible for leveraging maximum results by employing good technology that works."

7 "IT should be held to the same standards as other departments."

Technology is often seen as a magic bullet that slays all competitors. Thus, it's no great surprise that IT departments at many companies tend to be treated with kid gloves. A senior banker recalls how he almost fell off his chair when his CIO insisted that IT is the lifeblood of any business, and that it should not come under the supervision of any senior manager other than the CEO.

Experts say this is a big mistake. Allowing IT managers to operate as some sort of rogue CIA operatives will lead to ballooning budgets and user-unfriendly technology. IT staffs should be subject to the same financial checks and controls as other departments. The IT manager should report to the CFO on a regular basis, keeping the finance chief informed about on-going projects, expenditures and operational glitches. In addition, the IT department should be responsive to other departments as well. Experts say the IT staff should have a simple system for logging complaints, as well as a point person for dealing with those complaints. Moreover, IT should announce planned system shutdowns via company e-mail, and explain why unexpected crashes occurred. Good communications goes a long way in soothing illwill between departments.

8 "This project will cost more money and take longer than expected."

Technology projects are notorious for running over budget and behind schedule. Therefore, once a CIO submits a budget and a deadline for a project, finance managers would do well to run a few numbers of their own. Tech experts say CFOs should devise a worst-case scenario for all tech projects, doubling the cost and tripling the rollout schedule. If the project still makes sense, then sign off on it.

In addition, the project leader should be held accountable for any deficits that may occur. Indeed, Dave Allen, a Malaysia-based project consultant at networking specialist Logica PLC, insists that finding the right project leader within the company is the linchpin to ensuring that the project gets done on time and within budget. "It's not enough that the project leader understands technology, but has an equal understanding of meeting the business objectives as well," says Allen. "Outside consultants should only be used if the company does not have suitably trained experts in rolling out a similar system."

9 "We made a mistake buying this technology."

Let's face it, nobody likes admitting they made a mistake. But the fact is, almost all companies have, at one time or another, spent money on new technologies that simply did not pan out. Sometimes, a technology is simply outstripped by new product releases or trends. Other times, executives at corporate headquarters mandate a company-wide move to a conflicting system.

John Lee, the Singapore-based vice-president of finance at a global pharmaceutical company, recalls how his department once purchased new client-servers as part of a rollout changing the IT infrastructure into a distributed computing model. But in the middle of the project, the company's US-based CIO came back with a new solution for linking all the company's Asia-wide operations through a new Intranet system that used proprietary software. That software, Lee says, had severe limitations running on the existing hardware platform in Singapore.

At that point, a CFO has little choice but to make the best of a bad situation. Says one Singapore-based finance manager: "You may not like the decision, but you've got to do your best to cut your losses." Tougher yet: when the CFO realizes that a costly pet project was a mistake. Knowing when to bite the bullet on a new technology can be one of the trickiest decisions a finance director faces, particularly if the finance director backed the project. Therefore, more than any other executive, the CFO should monitor all technology rollouts. Seek input from your IT managers, but be wary of what they say - especially if they championed the project. Mostly, listen to end-users. And be ruthless in your evaluation. If changes have to be made, make them - no matter how bad it may make you look. Remember, as the financial watchdog for shareholders, it's your job to make sure your company does not throw good money after bad.

10 "You should do this yourself."

It's understandable why no CIO would utter those words to a CFO. Really, what employee wants to tell their boss to do it themselves?

Maybe they should. In reality, some finance-related rollouts are better handled by the finance department. Pamela Rodrigues, formerly a CFO at a large multinational die-casting company based in Thailand, recalls one such project. Rodrigues says that the finance department was charged with the task of rolling out ACCPAC accounting modules, consolidating the company's production and manufacturing costs and sales revenues into a single balance sheet. But rather than rely on her IT staff, Rodrigues became a self-taught expert. After reading the manuals for the software, she was convinced she could install the application herself. And that's what she did. "I did it because I was not sure if the IT person would understand the peculiar business model that we have, and it would take time training the person to understand the business processes," she explains. "And I found it easier to do my own implementation and meet the deadline."

In other words: physician, heal thyself.

Tony Sitathan is a technology specialist based in Singapore.
John Goff is editor-in-chief of CFO Asia.