Participants: Paul Micomonaco, financial controller, AAT Kings Tours
David Spiers, CFO, Beacon Lighting
Vivian Clark, CFO/company secretary, DWS Advanced Business Solutions
Paul Chambers, CFO, Henkel Australia
Gerard Burke, director, corporate services, Link Recruitment Group
Neil Walsh, CFO/general manager corporate services, ParaQuad Victoria
John Johnson, executive general manager corporate services, Port of Melbourne Corporation
Neil Cooper, CFO, O-I Asia Pacific
Jed Simms, executive chairman, Capability Management
Leon Hall, general manager, services, PrintMedia Group & general manager, services, Ducor Australia
Kate Mills, editor, CFO
CFO: Does IT work better when it reports into finance?
Vivian Clark: Having dual control of IT and finance means you can keep a tab on your expenditure and know exactly what it's doing.
John Johnson: I used to have control over IT as well as finance, and it was all a lot easier to get what you wanted done.
Gerard Burke: The trend is that [IT] is now reporting directly to the managing director, which is a trend away from having to report to the chief financial officer.
David Spiers: There comes a point when the business gets to such a size, and the complexity of that [IT] role becomes so great, that it does need a specialist and it does tend to report to the managing director and to be on the same level as the CFO.
Leon Hall: IT is so deeply embedded now in all facets of businesses. We're on the cusp of upgrading the IT manager to senior manager level because we feel it is so important for business, but secondly to give [the IT manager] a more rounded view of the business over time so they understand all facets. I think that's becoming more common - that the CFO and the CIO are on the same level.
CFO: What's the key to success in IT projects?
David Spiers: I think engaging all the stakeholders in any project is the key to success. And I think it's engaging them right from the beginning to the end of the project, but also delivering the benefits or the outcomes from the project as well, which occurs afterwards.
Jed Simms: We recently conducted some research looking at 59 projects in detail. One of the things we found was that none were set up to deliver what the business really wanted.
The business often doesn't know how to drive the IT project to get that value, and unfortunately the IT industry doesn't help because (IT people are) quite happy to implement, say, an enterprise resource planning system and think that's great. And you say, 'Well, actually we don't exist to turn an ERP system on, we actually exist to provide service to our clients on a competitive basis and meet the demands of the market; that's what we're trying to achieve'. The ERP system is just something back here that enables us to do it better, we hope.
So one of the key things is that the business needs to be more clear about what it wants. For example, I live in the mountains where we don't have a water supply. We have a licence to tap a creek. So we have a pipe coming down the side of the mountain and every now and then the water stops. We wanted to get it fixed so we hired a guy to clear the pipe. He did an excellent job but we still had no water. What did we actually want? Running water. What did we ask for? Clean pipes.
CFO: How do you measure the return on IT investment?
Leon Hall: It is also not easy to get a return on investment on IT. Even to try and measure a return on investment from IT is hard - it could be just keeping your clients happy, for example, so how do you measure that easily?
Neil Cooper: But I think nonetheless you have to. You have to provide some form of hard documentation that says, or tries to quantify, what the costs and benefits are, because if you don't you can't rank it.
I sit on the IT global team, which means that I'm responsible for, along with a number of other executives of the organisation, deciding what IT we spend globally.
We compete dollar for dollar with every other project that occurs throughout the globe. So for an IT project that I think needs to be done in our region, I compete with a manufacturing facility that may be required somewhere else. Now certainly when we are putting our project up - and I know that IT projects are only a subset of our total capital expenditure - I need to be able to provide something that says 'Well, this competes appropriately with our manufacturing investment'.
In order to do that, we do have templates that people fill in and we rank projects and we compete for the scarce dollar.
Paul Chambers: I agree. The upfront assessment of the organisation's capability to implement the project is an important phase that is often overlooked. The business case is developed, the sponsor is satisfied and you're off. But the actual capability to do it has not been fully evaluated and then you're running to catch up from day one.
Neil Cooper: And costing your internal resources is critical. We have our IT people - in the Asia-Pacific anyway - fill in time sheets like the chartered accounting firms. There was resistance to it some time ago when we introduced it, but now they do it and it's fine.
CFO: What problems have you come across in implementing IT projects?
Neil Walsh: We've probably all come across times where we've said 'This is going to deliver this to us', and then we get somewhere in the middle of the process and realise it's not going to deliver it. So what are we going to do?
All of a sudden your whole focus changes as to what you're going to do and how you're going to overcome this issue. Invariably all these costs get added on top and we get an end result that is not what we we're after.
John Johnson: It's an undervalued part of the project management, that is, knowing when to review and when to pull the plug.
David Spiers: I think sometimes there is an expectation gap between what the IT team should be delivering and what the business expects of it. For example, when my personal assistant rings up the IT help desk, she might have a query about PowerPoint. Well, while IT might dabble in PowerPoint, that's not what they're responsible for. But if she doesn't get satisfaction from their answer, she's likely to think that IT doesn't have any idea, and that's just not fair on the IT team.
Neil Cooper: It's a running joke, of course, that whenever anything goes wrong you blame IT.
There are IT help desks that are dealing with IT issues and then we have another group that we call 'business user experts'. A business user expert is a person who knows how to use SAP, who knows how to use Microsoft products - Word or PowerPoint, or whatever. That's a business user expert, not an IT expert.
The IT expert is the person who facilitates and allows that product to work. If you haven't got the right distinction - and somebody who is a PA is not going to know - of course they just blame IT.
CFO: How much of the problem is with the IT team?
Leon Hall: One of the things that we've found over and over again is that a lot of people in IT might be brilliant at hardware or software or programming, but they actually don't have any business sense.
Whereas if you have been in finance for a long time or involved in manufacturing in a company, you just have a general business sense.
Paul Micomonaco: IT is where finance was 20 years ago in terms of business sense. Some IT people put themselves into that box and put the propeller on their head and sit in a corner and just don't want to know.
Jed Simms: But if you look at the accountants in your businesses, you know there are a lot of accountants who will never make it to CFO. They're bean counters and that will not change.
Similarly, there are IT people who will only ever be comfortable pushing switches and cabling things up and so on and they're never going to be a CIO or equivalent.
What we often ask a CIO is how many people in your organisation can give a presentation on how your company makes money, who are its competitors, who are its customers, what are the products, what's selling and so on. Even in the biggest companies, we've never got an answer of more than 5 per cent.
I then say, 'How can you design systems for a business that you don't understand?'. Then we talk to the CEO and they say, 'Oh yeah, we've always known that' and you say, 'Well, what have you done to train them?'
You need to educate them in your business. You can't expect them to pick it up by osmosis. Their training is in technical skills, not in business skills.
CFO: Who here trains their IT teams to understand their business?
Leon Hall: As I said before we train them by virtue of upgrading their position and at least two of them are at the senior management level. That way they get a feel for the business and all the different disciplines of what sales, production, administration and finance need.
We started that about two years ago because it is such an integral part of any business that now they really have to be up with it.
Neil Cooper: But when you are a large organisation you also need specialists. I need people at the pointy end who understand how things work. We tend to have our business information managers who have a leg in both camps and they understand IT and business - and that's what they're specifically trained to look at.
Their job is to try and overlay the business need on top of the technology that is available. So we don't go through a process of - except on a general level - training all our IT people to be conversant with all the business, but certainly with the business information managers we do.
CFO: What can be done to heal the communications gap?
Vivian Clark: Having a very good relationship with the IT manager or the CIO is the most important thing. If there is a turf or a territory war or anything like that going on, it is not going to work.
And then you have to make sure the CIO or the IT manager are given credit where it's due and make sure they are brought along on the journey with you so that they feel a part of the team.
You need to work on that professional level and have great respect for each other.
Gerard Burke: Also you need to sell the victories for IT. You certainly get a victory from the dollar point of view when some sales guy breaks a record, but what do we do for IT?
Paul Chambers: Yeah, for IT, it is successful if you don't notice they're there.
David Spiers: And they're at an actual disadvantage too, because they can't make the business successful, but they can be responsible for it taking a dive. So they're in a no-win situation.
Vivian Clark: People complain that IT [people] never do what I ask them to do - I mean, I've lost IT managers over that. They can feel underappreciated when the head of marketing asks 'are you going to fix my PC on time?'.
You have to be with them on those battles for them.
John Johnson: We have just moved offices, which was a fairly big undertaking, and in doing that we had IT facilities located in two offices. There was a huge amount of background work that went into the project. So what we did was take our IT infrastructure from our offices and relocate it into a service-managed facility, and reconnect our existing offices to that facility. So that when we moved in, it was just a matter of picking up the PCs, putting them on a new desk, and plugging them in.
No one noticed any of that going on. The only thing that people noticed was that, on the day that they moved, they walked in and there was their PC and they could log on.
Leon Hall: That was actually a fantastic result.
John Johnson: It was fantastic and we made sure that the accolades went back to IT. We told them they had done a fantastic job. But it was only the tip of the iceberg. The work that went into planning the total relocation of all of those facilities was mammoth and no one really recognised it.
© Fairfax Business Media
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