Three Mistakes to Avoid When Pitching IT Spending

By Greg Baker

(Back to article)

Too often, IT approaches a meeting with the finance department armed with jargon and ready for battle. A better strategy is to get IT and finance professionals sitting face to face around a table where everyone can contribute, each in his or her own way, to the underlying well-being of the organization.

A good first step in establishing an effective collaboration between IT and the CFO is recognizing that IT is just one of the many budget requests that CFOs have to balance. This means that anything IT requests must first make sense within the overall strategic plan for the company.

At the highest level, the CFO’s role is to participate in determining the strategic direction of the company and to communicate that to shareholders and lenders. Below that, the CFO stewards fiscal responsibility; ensuring there are good controls in place and that the data required to make sound decisions is available. Where spending money on technology is involved, the CFO depends on IT for the data—both technical and financial—that he or she needs to make a decision with confidence. This is where IT makes the three most common mistakes:

Mistake #1: Forgetting About Payback - The most common mistake is when IT concentrates too much on how a project solves technical issues―things like bandwidth constraints or deployment requirements―but then fails to talk about payback; how the project can improve sales or reduce costs.

A Golden Rule of communication is to know your audience. It’s critical to stop and think about what the person who approves your project will look for. Lead off with a clear summary of what’s being sought and how it will help drive sales or reduce costs. This immediately grabs attention and makes a strong first impression.

Done creatively, even a generic storage upgrade can be positioned as achieving the lowest ongoing maintenance costs, or supporting the fastest record retrievals to improve customer satisfaction and sales. Put this in your introduction, and I guarantee your funding odds will improve.

Mistake #2: Using Unexplained Jargon - The second most frustrating situation for finance is when a request contains technical jargon that the CFO can’t understand, no matter how hard he or she may squint and try. For example, I recently received a bare bones request for a “3560 Catalyst switch to allow 10GB Ethernet attachments along with specialized cables and 10GB SFP connectors.” There was no translation of what this was or what the IT acronyms meant, much less how it would contribute to the well-being of the organization.

As a result, this request was delayed over a week until the requestor returned to the finance department and explained that the new switch would accelerate our data across multiple network devices, consume 30 percent less power and improve productivity with unified data, voice and video traffic. That I could understand. Obviously the requestor knew this information. It just hadn’t occurred to him to include it in the original request for funding.

Don’t underestimate the language barrier between IT and finance and spend the upfront time translating your technical terms into business terms to get your point across.

Mistake #3: Incomplete Submissions - The third most common mistake is also the most avoidable. I can’t tell you how many capital requests I’ve seen that failed to mention the amount requested, the vendors being used, project timing or even who the requestor was and what business unit the requested IT was to support.

Most companies use a standard capital request form with standard boxes to fill out. Do yourself a favor: fill out the form completely and have someone proof it before hitting the send button. If the capital request form is complete and reads sensibly, you’ve eliminated many reasons for questions, delays and frustration. A completed form also shows a little collegial respect and means a win-win for everyone involved.

The Bottom Line

Having approved hundreds of requests, I know approval odds easily rise 50 percent when they spotlight business benefits in plain English with a fully completed form. The bottom line is that finance and IT professionals have a lot more in common than their sometimes antagonistic stance would suggest. They both tend to be very analytical and detail-oriented. Both are guilty of wrapping the obscurity of their respective specialties around them like a wizard’s robe, on occasion, and they obviously enjoy having their own jargon.

But in the current environment of tightening budgets and increasing competition, allowing IT and finance to speak two different languages is a luxury no business can afford.

Greg Baker is the chief financial officer for Logicalis, an international provider of integrated information and communications technology solutions and services, where he oversees finance, accounting, treasury and strategic planning. Prior to joining Logicalis, Mr. Baker held key finance positions with Thomson Reuters, a Tier-1 automotive supplier, private equity firm Talon LLC, and PricewaterhouseCoopers.