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Keynote
Bridging the IT-finance divide
Iain McCoo, Senior VP and Head of Finance, Lehman
Brothers India, gave a tongue-in-cheek presentation on why IT and finance
don’t see eye-to-eye.
Iain McCoo |
The topic of the presentation was ‘What finance thinks
of IT.’ The first thing that the presenter said was that the presentation
was “tongue in cheek,” and should be taken in that spirit. Why don’t
IT and finance see eye-to-eye? “It’s a bit like a marriage. We have
to ensure that we work hand in hand,” said McCoo. He highlighted the fact
that over the last 25 years, the significance of IT has been understood. The
average organisation’s expenditure on IT support and development works
out to 50 percent of its support and control functions.
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Often, IT provides over-optimistic
numbers in terms of costing and delivery. Then a lot of IT projects run
into overtime
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The important thing is to ensure that there’s funding for projects. “We
must iron out the differences. If you can bring a project in on time I would
be happy.” McCoo remarked that often optimistic numbers in terms of costing
and delivery are provided by the IT department. Then a lot of IT projects run
overtime. There are many things that affect projects—third-party vendors,
users, etc. It’s hard to fix responsibilities and isolate where things
are going wrong. This is difficult to pinpoint. “In one organisation that
I was at, we spent $10 million on a project. 10 months into the project we realised
that the technology was sub-optimal and that delivery would take one more year.
We had to throw away the work and some of that investment,” he recalled.
Many organisations use outdated project management systems.
One of finance’s pet irritants is the case of a project that is delivered
but the maintenance for the next year is extraordinary. Often, maintenance gets
bumped into run rates and budgets. A large proportion of IT spend goes towards
the maintenance bill. “RoI doesn’t help as a lot of returns are intangible.”
If your finance department is taking the decision on its own, you need to do
some alignment. Finance should not be carrying the card that lets them say ‘yes’
or ‘no’ [for an IT project],” concluded McCoo.
| Ian McCoo is a Senior Vice-president and Head of
Finance for Lehman Brothers Services India Private Limited, overseeing the
full suite of financial responsibilities for India, including financial
and regulatory reporting, management information, tax and strategy.
Prior to this, McCoo served the firm as financial
controller in equities, commodities and for its Swiss and Italian operations.
Most recently, he was European controller for the firm’s investment
banking division. Before joining Lehman Brothers in 1991, he worked in
the manufacturing field and as an auditor.
McCoo has a Bachelor of Commerce degree from the
University of Cape Town, South Africa.
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- In the last twenty-five years almost all enterprises
across verticals have realised and acknowledged the significance of
IT.
- The average expenditure on IT support and development
works out to 50 percent of an organisation’s support and control
functions.
- It is important that CIOs ensure enough funding
for their project to be deployed.
- Many factors can hinder the smooth functioning
of a project, including third-party vendors and users.
- Many organisations continue to use outdated
project management systems that hamper the operational process and in
turn reflect in the cost incurred.
- Finance officers are irritated by the fact that
though the project is delivered, the maintenance cost remains exceptionally
high.
- It is observed that a major portion of IT expenditure
flows towards the maintenance bill.
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