IT is a numbers game

IT managers could benefit from some accounting knowledge

How deep do IT managers really want to get into the details of financial accounting for IT purchases? Isn’t it better left to the bean counters? Do they really want to discuss capex and annuity structures?

Well, IT market anlayst firm the Robert Frances Group says IT managers should pay more attention to the numbers when buying hardware and software. In the group’s recent research note, Best Practices for Creative Financing, analyst Adam Braunstein basically says IT managers often forget that everything’s negotiable and end up leaving a lot of value on the table. And, no surprise here, they often lack the accounting skills to sweat these details so need to work closer with the geeks in finance who do.

“Most IT executives are unaware of the payment options available from vendors,” Braunstein writes. “Vendors should be made to compete aggressively on financing terms, just as they are on price and SLAs.” Specifically, the report suggests pushing back on up-front payments, using a subscription model to better match payments to delivery of value, and bundling purchases to get deeper vendor discounts.

Of course, you don’t want to get too creative with your financing to the point of understating your com­pany’s capex or operating costs. But, on at least one point Braunstein hits the mark: it’s not just about reducing your TCO for IT purchases, it’s about aligning incentives so the vendor is held accountable for performance. Find the financial structure that will motivate your partners to be the best they can be. Call it financial IT architecture — a new IT job description?

On another topic, Forrester Research recently did a nice rundown on the pros and cons of tightly centralised AD (application development) organisations versus more decentralised ones. It’s the age-old debate. Centralised AD gets you better resource utilisation, skills development, standards, compliance and reuse, notes Forrester, whereas decentralised AD makes for better alignment, subject-matter expertise, streamlined processes and simplified project management.

But, which way is the wind blowing? Forrester says enterprises are trending toward a blended structure. But the report fingers three factors that often tip the balance: culture, politics and geography. Who’s got the budget? Who’s got the power? Who’s got the street cred? In that tug of war, I think I know which side I’ll bet on these days, and it isn't central control.

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