Consulting » ERP, XML, ASP: FD, RU IT OK?

How do you make senior managers look stupid? Get them to talk about IT. At least, that’s what a new management textbook* claims. The book’s authors, IT consultant Rene Tissen and technology hack Barry O’Dwyer, believe senior executives, such as FDs and CEOs, are ignorant when it comes to technology.

Tissen and O’Dwyer say IT only features sixth in line on the average boardroom agenda, and, while executives do have other issues to discuss, this major cost base is often brushed over by directors “simply because they haven’t a clue about it”. With this in mind, the authors aim to cut through the swathes of technology and jargon to “explode the myths and hype surrounding IT”.

However, like most good consultants Tissen and O’Dwyer only make things worse. “ERP – Many are those who still believe this to be the sound emitted by a CEO after a heavy lunch,” the authors’ IT glossary states. And their definition of enterprise resource planning is no better. “The first thing you should know about ERP is that you can forget the planning. Planning has nothing to do with ERP. Secondly, resource is pretty irrelevant, too. See, that’s jargon for you,” they say.

One thing we do learn from Tissen and O’Dwyer, apart from the fact that IT consultants persist in talking to senior executives like they are children, is that today’s IT lexicon is self-sustaining. For example, all financial software, regardless of functionality, is packaged with the same descriptive baggage attached. Applications are always flexible, scalable, future-proof, integrated, real-time, XML-enabled, end-to-end solutions with thin clients, thick clients or even no code on client. They all have low cost of ownership, high ROI and payback can be realised in the short to medium term.

As long as the techies have control over IT within organisations such nonsense will prevail. But finance directors should be taking a proactive stand to sift through the rubbish, even if they need to broaden their knowledge of IT terminology to do so.

As a Financial Director survey showed in our April 2001 issue, some FDs are unresponsive to IT parlance. We asked our readers to rank how important certain standards and technologies are when assessing a new financial software package. Security, ease of use and data analysis all ranked highly.

But, most notably, ERP, BASDA (Business Application Software Developers Association) accreditation, XML (extensible markup language) and ASP (application service provider) were considered least important, even though these are some of the most essential technologies in business.

Satirising the pervasive nature of TLAs (three letter acronyms) is a well-worn path – but FDs’ evident unfamiliarity with these acronyms is an indication of how much they are missing in the IT space.

In the US, the boardroom IT revolution is well under way. The reigns of IT decision making have been firmly placed in the hands of the CEO and CFO – so much so that the chief information officer (CIO), once the darling of the board, is now jokingly known as ‘Career Is Over’.

Steve Harvey, Microsoft’s UK director of people, profit and loyalty (aka FD) has noticed a similar trend in the UK. “We start by winning the heart and mind of the CEO in terms of discussing leverage opportunities of existing investments and what new systems are required. The FD is our next port of call and then the CIO. The FD gives the CEO information in a way in which he and the board can understand. The CIO’s job is to provide information for senior managers,” Harvey says.

However, some service providers still feel the FD is not fully equipped to negotiate IT contracts. Andy Popplewell, marketing manager of HP Services, says: “FDs’ grasp on technology is improving. But they shouldn’t be making decisions in isolation, the CIO should always be involved as technical input is needed.”

But, even if FDs are not the first point of contact for IT vendors, and, let’s face it, meeting software salesmen is not always top of the agenda, they should make sure the CIO acquires new skills and learns the language of finance. FDs should make sure questions such as “What is the return on investment?”, “Is there any profit or risk sharing involved?” and “Why aren’t our current systems cost-effective?” are asked by the CIO and the answers given to the FD in terms of pounds and pence.

* Telling IT like IT is, by Rene Tissen and Barry O’Dwyer, is published by Scriptum.