Flex Your Financial Muscle

• By Dian Schaffhauser
• 08/01/09

Beefing up your team's finance and accounting know-how can give your IT organization a strategic edge within your institution.

THE RELATIONSHIP BETWEEN IT and finance has a (deserved or not) history of, well, let's call it unease. Budget time in a university can make IT departments as nervous as a long-tailed cat in a room of rocking chairs. In organizations where IT actually reports to finance, the relationships are not necessarily any better. In a recent discussion on a technology forum, one CIO posted, "I can confirm that working for a CFO is rarely a benefit." Another participant wrote, "A company that puts the CIO under the CFO looks at IT as a cost, not a value driver."

Yet any major technology undertaking requires a great deal of financial analysis and planning-- areas where financial people have some obvious expertise. Recognizing this fact, smart institutions have learned to cross that chasm by strengthening their IT team's financial backbone. One such pioneer is Indiana University, where Laurie Antolovic' actually holds hybrid roles as both deputy CIO and CFO, a rare position in the ranks of higher education IT leaders. She sits on CIO Brad Wheeler's cabinet, alongside associate VPs in charge of security, networks, infrastructure, and user support.

In her current position Antolovic', who started out at IU in 1985 as the systems and accounting manager of the Bloomington Health Center, serves as the chief administrative and finance officer for the IT organization, which oversees operations for eight campuses. Running the finance side of IU's IT organization, with an annual budget of $100 million, is equivalent to running a small-town telephony operation. "It's a big job," she says. "Basically, I am in charge of strategic business thinking."

Antolovic' believes any of her peers would make excellent CIOs elsewhere. But she's also been able to guide her colleagues to understand what it's like to be a CFO. "I think they're all savvy financial people in addition to being technology leaders."

She acknowledges that having a dedicated CFO in the IT organization isn't practical or possible for every institution. But it is possible to develop financial strengths on your IT bench, she stresses. A combination of technology and operational, finance, and accounting know-how among your staff is a potent formula for sound decisionmaking, Antolovic' points out. It also makes your IT team that much more valuable to the institution-- transforming IT from a "cost-center" to a "value driver" in the university's growth and management.

Here, Antolovic' offers guidance on five ways to help you develop a financially savvy, strategically positioned IT organization.

1. Learn the Language

Just as there's no bamboozling Antolovic' with technical jargon, you and your team need to learn finance and accounting terminology and concepts. "My obligation is not to be dumb about technology," says Antolovic'. "I do not need to know to the detail that I could execute, but I don't want to come across as somebody who doesn't understand what I'm talking about. I read. I really try to understand at some level what is going on at the IT side."

The same applies to technical specialists who want to serve a more strategic role in the organization. That may require hitting business books (even Accounting for Dummies) or signing on for an accounting course or two (there are free online options at sites like WannaLearn.com). Reading The Wall Street Journal every day wouldn't hurt, either. Your staff doesn't have to sound like they went to Wharton, but having people with some honest facility with financial terminology and budgetary practices will go a long way toward building your IT team's financial backbone.

2. Add or Develop Finance Experts

Typically, most IT departments don't have people with a finance background on staff. But that doesn't mean you have to accept that fact as immutable. "If I were a new CIO [with only] a backroom bookkeeping function to support me, I would probably go ask the CFO if somebody on his staff could work alongside me, and then I'd develop that person," says Antolovic'.

At the same time, she adds, leaders should look beyond the current roles people are playing in back-office bookkeeping or IT operations. "If you've got a shop that's only doing backroom operations, maybe that's by design, but it may not have anything to do with the lack of strategic capabilities. Y ou could look at those people as well, and see if anybody could rise up to [a new] level." That means turning financial or accounting people into IT-savvy staffers or vice versa-- ferreting out that network administrator with an accounting degree.

3. Templatize Your Processes

Antolovic' and her finance team have introduced templates and processes with a financial flavor to guide decisionmaking in her IT organization. For example, all proposals must follow a template that ensures nothing is left unconsidered in the planning process. Get the help of your own accounting people or those in the university's accounting department to help you develop the frameworks for these.

To further aid in decision-making, IU uses activity-based costing (ABC), a process in place since 195. ABC provides a view of all cost drivers for an activity, both direct and indirect. "We have a view of our finances that's different from just saying, ‘I have a budget of $10 million; $5 million for payroll,'" Antolovic' explains. "We account for all of those dollars in terms of outcomes or services." That allows the IT organization to understand the true cost of any service it delivers, not just the obvious expenses.

4. Don't Fear Financial Discussions

Once a year, Antolovic' chairs what's called an expenditure review committee, or ERC. "It scares my colleagues off when they see ERC," she laughs. This exercise involves looking at budgets and resources and determining how much the IT division can reallocate to new initiatives. "We have to respond to a lot of needs. We don't necessarily always receive new funds for them," she says. "In order to deliver new things or expand offerings with no new moneys coming in, you've got to constantly look at your resources." As an example, Antolovic' points to a $172 million network plan she spearheaded. "There's no new money requested there," she says.

An immediate value of this kind of review-- particularly now that budget cuts are a part of any university discussion-- is that Antolovic' believes her IT organization is in a good position to respond to change. "We've already netted the savings. We act as if there are always budget cuts. It's what ERC is about."

Going through a similar financial exercise can help your group decide where resources need to be, what IT needs to stop doing, and what IT needs to ramp down in order to have the funds to support new initiatives. The value that kind of thinking brings to a university: priceless.

5. Create an Inside A-Team

Earlier this year, Antolovic' led a group of technology and business experts at IU in completing the $172 million network plan mentioned above. The 18-month project developed a 10-year master plan to lay a transport infrastructure that "can deliver all the kinds of signals that we need to deliver in the university," says Antolovic'.

To ensure she was covering all the bases, she visited other universities that had done similar planning. The difference was that some of those other institutions hired consultants-- at great expense-- to help them through the effort. "If you don't have good underpinnings, you almost have to have a crew of consultants coming in to do cost analysis," explains Antolovic'.

However, if your IT team has the right financial know-how and budgetary understanding of the way your university works, you can position yourselves as, essentially, inside consultants. "You need to understand your cost structure, where value is being added, what you are transitioning to, where your investments are today," she advises.

By positioning your department as an inside A-Team, IT will not only be more valuable to the university, but also potentially have an easier job of selling new tech initiatives, since you understand how various parts of the university operate financially and functionally. "If we propose a funding partnership with a school, I understand how these schools are funded and how this is going to be attractive to them-- and they'll see there is a benefit," Antolovic' says.

Even as Antolovic' strongly advocates for IT-finance dream teams, she also adds a note of caution. "I'm not going to make it sound easy," she says. "We don't always agree. In fact, we have very vigorous discussions." Yet despite those disagreements-- or perhaps as a result of them-- an IT-Finance team can be integral to a university's strategic planning process.