At Apptio, we often hear that there is a disconnect between what CFOs want and what CIOs deliver. They don’t speak the same language. IT is a black box and the spend doesn’t seem to map to business goals. That may not be true in all organizations. In fact, the CIO and CFO may be closer than once thought on their perspectives around technology and finance.
Larry Blasko, chief revenue officer at Apptio, spoke today with Sheila Anderson, EVP & CIO for corporate functions at Liberty Mutual, and RJ Harza, chief financial officer for technology for Equifax. Blasko speaks regularly with Apptio customers and with TBM practitioners world-wide. His conversation with Anderson and Harza during the TBMC20 “Fireside Chat: Getting CIOs & CFOs Aligned” may give you better insight into how close your philosophy matches your counterpart’s. Their discussion will also provide tips to help you collaborate more closely to drive company success.
Here is a recap of some of their Q&A. To hear the entire discussion, register for TBMC20.
Down to brass tacks – measurement
Larry Blasko: We’ve brought together a CFO and a CIO to discuss how to leverage TBM to drive alignment between technology and finance. Let’s start by getting into how you measure business value and the ROI of technology investments and how TBM has improved this ability to assess business value in your organization’s?
Sheila Anderson: This is a great question. One that I’m sure most companies are still working to solve. At Liberty Mutual, we are certainly in that same situation and TBM and Apptio have definitely helped us with that journey.
One of the things that we try to focus on is going all the way back to the business case. Basically, what are the business impacts and how can you measure value in terms of those business impacts. The other way that we try to measure that is through tying this in with an overall view of our application landscape and application health. We’ve actually created a dashboard and a process that gives us the ability — for all of our applications, whether it’s just part of our run portfolio or whether it’s in our invest and grow — to survey our business partners and they can give us a lens into a couple of key categories.
And then we layer that on with our total view of application health that measures a lot of different indicators across our organization, like technical debt, currency, architecture,
cloud technology, etc., and then how is it aligned to our application roadmap. So, we really look at all of those things as a determination of value for the investment in our application portfolio.
RJ Harza: I’ll put a little bit of the financial lens on [measuring business value] since, at the end of the day, it’s our ability to tie in either a revenue increase based on volume increase associated with the underlying technology products and/or some sort of cost efficiency. The cost efficiency could come into play in terms of a reduction of vulnerabilities or more optimized ability to produce more utilizing the same level of resourcing, which indicates a reduction of tech debt.
And then similarly, from a revenue perspective, increased volume, better features, which help us from a price perspective. Where TBM comes into play for me is in terms of being able to connect what we’re seeing from a commercialized product down to the individual services that technology is producing.
Value of TBM certification
Blasko: I’ve heard CIOs say that TBM and Apptio give their technology leaders a mini MBA in financial management. How important is it for technology leaders to understand the critical finance aspects of their business function — think of things like unit rate is fixed versus variable, direct versus indirect?
Anderson: I view the CIO role as both a technology and business leadership role and [the financial aspect] is just one of the many things that we have to lead and manage through in our roles. The financial management aspect is critical to understand all of the decisions to make priorities and trade-offs, which is one of the things that we all have to do. We often have much more in the wish list bucket than we do in the available funds bucket. So, we’re constantly having to manage the business priorities against available investment. As a leader, it’s important to understand the transparency, the units behind that, where the drivers of your costs are, which of those are controllable, and which ones are not. And all of that plays into the decisioning around how you prioritize your work. Layering on top of that are all of the technology aspects that you have to consider as well. And of course, tying in, and most importantly, the business value and opportunity there.
Harza: I fully agree. Really understanding your financial landscape is critical from a decision-making standpoint. I point to things like really understanding unit costs and what it costs to produce a widget or a unit of output for the technology organization is critically important. And I would say even more so, if you’re going through a transformation as we at Equifax. We’re going from what I would call is primarily an on-prem model to a cloud-based model, understanding the difference in terms of you once had as a more fixed-capacity balance sheet type activity to a much more variable activity is critical for the business all around, especially for technology and making decisions in terms of what services are utilized, how they’re architected, and what that’s going to mean from a cost impact perspective as more value comes through the door.
In other questions, Anderson and Harza gave their opinions on run the business vs grow the business – what the ration should be, they talked about how IT and finance view show back versus charge back, and the disruption/opportunity provided by the rush to the cloud and agile methodologies. They agreed more than disagreed, but the nuances were telling.
Please take a moment to listen to the entire Q&A by registering for TBMC20. Once there, you’ll have access to more than 100 keynotes (like Blasko’s), customer success sessions, live roundtables, product demos, and best practices sessions. And, you’ll have access until TBMC21 rolls around.