How CIOs Can Say What No One Wants to Hear
Even When the Cloud Is Free It Comes With Costs
Every CIO has dealt with it — a line of business (LOB) or function asks why they must budget precious funds for something that internal IT delivers, say instant messaging or web analytics, when there appears to be a lower-cost alternative available as a SaaS solution. When every dollar counts, it’s not enough that IT departments provide secure and effective technology; they must explain in clear, concise business terms why those technologies are worth the expense. Here’s how to do that effectively:
- Anticipate — don’t react. The role of IT is to provide and manage technology in support of the company’s overall business objectives.If the head of sales is asking about free email, chances are the IT department has done a poor job communicating its role and capabilities. “If you wait for the LOB to ask about your costs, you’re already in a defensive posture,” says Lynda Stadtmueller, program director at consultancy Frost & Sullivan. “Instead, the CIO needs to get out to the organization and talk about alignment — how all the top business objectives for 2014…depend on the successful use of technology.” Anticipate and address cost questions before they become an issue, not after.
- Get granular. IT functions establish more credibility with regard to costs through transparency. In the past, IT often used crude cost-allocation models. For example, an LOB might be charged based on the number of employees or revenue, rather than their actual usage of IT services. New software solutions can provide a detailed breakdown of IT expenses based on actual consumption. If IT presents a bill based on, say, the marketing department’s use of email — with clarity around all the associated technology and people costs — its business counterparts will clearly understand what they’re getting for their money.
- Reframe the conversation: ROI. One way to explain costs is not to focus on them. Instead, frame the discussion around IT investment and the return on investment the company will realize from internally provisioned resources. Issues like security and downtime are of deep concern to CIOs, but non-IT professionals might not get that an inexpensive public cloud will provide an inferior user experience that diminishes productivity and revenues. “You need to say, ‘Let’s talk about how downtime [or a security breach] could negatively impact your ability to serve the customer,’” Stadtmueller says. “Let’s talk about the additional revenue the ecommerce site will get if we have lower latency.”
By explaining in clear, concise business terms how “free” or inexpensive services from the public cloud carry large hidden costs, IT can highlight the value of its internal offerings. And that can turn IT from just a cost center into a strategic partner as well as a trusted guide through the developing world of cloud computing.
For more thought provoking cloud management insights visit vmware-erdos.com.