As I mentioned in my last blog post, “One company’s management of IT financials in a Cloud era,” I attended this week the IT Financial Management Association Conference in Scottsdale, Arizona, and am blogging on two of the sessions. I’m hearing a lot that can really help both public and private IT executives, particularly around the financial management of cloud computing.
The next speaker I heard was from Georgia State University (GSU). He started by saying that GSU’s recent move from a central IT model to a cloud provider model has led IT to ask itself a number of questions, including:
- What is the impact of moving from building to buying on the Web?
- Does the business want to do anything more than pick and choose from Web or outsourced providers?
- Does this mean that IT organizations need to manage the care and feeding of external providers for their business customers?
- Are IT organizations becoming intermediators?
- Are CIOs being transformed from CIOs to service brokers?
- Is IT as a result really now a vendor management function?
Does IT finance need to become the CFO of IT?
What do these questions imply for IT finance? Our speaker’s conclusion was that IT finance needs to move from being financial accounting—bean counters—to CFOs of IT. In this new role, IT finance needs to be involved in creating concrete business recommendations.
What does it mean to be a service broker?
The other question the speaker asked was: What still needs to get done with IT in the role of service broker? He suggested that what really still is needed is a catalog. Customers need to be able to match their needs versus items provided in the internal/vendor catalog. We need to enable customers to shop for the best solutions. The catalog absolutely needs to include competitively defined offerings.
Going further, in this new reality IT’s role becomes about eliminating friction in the selection and management of vendors. For comparability, SLAs need to be based on variable delivery. Cost calculations become more important than ever – and we in IT need to allocate them as we see them. With our vendor management hat on, we need to enable our customers to mix and match between the internal and external service providers. This means that IT organizations need to go from zero-based planning to variable-demand pricing. They need to become more like outside vendors.
Another interesting point the speaker made: In the past, we were judged by our actual predictable—today, we are judged by our ability to collect actuals at the time of consumption. This means we need just-in-time finance. From a planning perspective, we need to move from planning new services to offering them as they become available. This moves internal IT from longer term to shorter term projects. Simply put, IT finance needs to be help the service manager figure out the catalog. This catalog must include products competitive with internal offerings. And internal costs need to compared against Amazon or Rackspace. Customers can buy things somewhere else. So as an internal provider, you need to be able to say what makes you better. The customer makes decision of who they buy from. Meanwhile IT will monitor and manage external service providers. Central IT needs to provide a network and be an enabler of everything else.
So, what do you think? Do you agree with these assessments of how IT finance needs to change? Leave a comment and let me know what you think.