[HN Gopher] If you want to transform IT, start with finance
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If you want to transform IT, start with finance
Author : feross
Score : 281 points
Date : 2021-07-13 19:32 UTC (1 days ago)
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(TXT) w3m dump (zwischenzugs.com)
| rdxm wrote:
| Tried to plant this seed ~3 years ago at a large defense
| contractor. They were frustrated by the fact they weren't getting
| the velocity out of gov cloud they expected. my response was:
| "you literally applied the same procurement / process model to GC
| that you had for on-prem, wtf did you expect?!?"
|
| I called my pitch: "AdminOps", basically the message was the
| finance/biz side of the house needed the same type of
| transformative event engineering got with devops.
|
| They are still slow....go figure. Enterprises gonna
| Enterprise....
| shkurski_ wrote:
| Looking at Marx's quote on relations of production, could the
| money flow INSIDE a company be another topic that is worth
| exploration? From my simple understanding, in Marx's theory it
| was social aspect that mattered most. Do we still face such
| problems as it was in 19th century? I'm curious whether it would
| be a viable company where the surplus-value is distributed among
| workers and I have a fixed transparent salary as CEO and how it
| will survive the stage I and scale to stage II, IIIa, IIIb.
| steve76 wrote:
| More like end with finance. It's inevitable if you are
| successful. Why build it if you can buy it? Save. Just don't
| loose money. Finance is not what most people think. Frugal.
| Charitable.
| nhoughto wrote:
| Seems very familiar.
|
| Its not that finance get things done, its that they can prevent
| things being done entirely, or reduce funding/investment to the
| point they naturally peter out.
| throwaway984393 wrote:
| Conway's Law Revisited: If finance dictates your organizational
| structure, then finance is developing your software.
| kingrazor wrote:
| The stages mentioned in this article are exactly what the company
| I last worked for went through. Inevitably they lost customers to
| other products with faster release cycles. The company is still
| limping along but at a fraction of their former revenue. It's
| sad, really.
| yardie wrote:
| From an operational view finance and IT are more aligned than
| they are not. Finance is all about cash flow; where it's coming
| from and where it's going. And IT is all about data flow; where
| is good data coming from, what is it doing, where is it going. In
| my experience in IT most of the infosec applies broadly to the
| organization it's especially the case when working with sensitive
| financial information.
|
| Also, because of recent ransomware attacks I've been given
| (almost) carte blanche to secure our network and operational
| infrastructure with a special focus on finance, because the spice
| must flow.
| tmitchel2 wrote:
| Last part made me chuckle
| oneplane wrote:
| It's obviously going to strongly depend on the context, but I've
| found that there is a shared amount of risk in organisations
| where IT and Finance both have their choices to make together.
|
| Say you have some on-prem datacenter stuff for a manufacturing
| plant, you might have the request from factory operations to be
| as available and consistent as possible. The cost for such a
| thing might be astronomical, but even a single day of downtime
| would cover it. On the other hand, the finance department might
| already have made a risk assessment and set aside some money or
| had it insured in some way and now suddenly the impact of that
| risky thing that might happen is a whole lot lower in terms of
| money.
|
| For a lot of people that can be news, or unexpected. If you silo
| yourself you might end up engineering something that is
| completely unnecessary. At the same time, someone might be buying
| some expensive insurance, but forgets that unrecoverable data
| doesn't magically yeet itself into existence just because the
| insurance contract says so. So while on paper it's "covered and
| we just need to recover our systems and get on with it", in
| reality that might not be possible. Starting a company from
| scratch (IT-wise) leaves you with empty systems. Those are about
| as useful as a brick. A functional brick, but perhaps not the
| spreadsheet, email or CRM database you had in mind.
|
| This is a lot of words just to say: in most companies (as long as
| they don't get too big), most people are there for a reason, and
| most departments are there for a reason. Go up the chain of
| reasoning and you'll find your common reason ("because the
| company wants to make money" for example), and now you have all
| you need to 'justify' to yourself that 'those other people' are
| there for the same reason and with the same goal as you.
| landryraccoon wrote:
| I'm seriously stumbling over the description of phases I and II.
| Wait, this is a startup that doesn't have a strong product vision
| from day 1 and isn't aggressively iterating to find product
| market fit?
|
| Here's a tell tale sign that you have product market fit - your
| product is buggy and sucks and your customers constantly complain
| and demand more improvement but they can't give you up. They need
| to pay you because you serve a need they can't or wont find
| somewhere else.
|
| The customer needs a bespoke feature that really only they will
| use and isn't general to anyone else? Is the founder team
| disciplined enough to say no and focus on what really adds value?
| Sure, they would love for you to be a cheap outsourced dev shop,
| but that's why your CEO needs to push back and sell the vision of
| the company.
|
| Phases 1, 2 and 3 are backwards. Why is the startup trying to be
| a consulting company? This doesn't sound like the story of any
| visionary startup I know of. It sounds like a group of developers
| who can make a profitable software consulting company trying to
| pivot to making a product. IMHO a startup can be really
| dysfunctional in its dev process and management and still
| succeed, if they find product market fit first.
| sgt101 wrote:
| Back to money flows I think - if your business has significant
| venture backing then your view about it is correct. The driving
| force in the business will be to satisfy the investors, not the
| early customers. Many businesses are not like this though -
| they start out as a consultancy gig gone good and then scale up
| from there. Investment comes from a workable functioning
| business in these cases. A new investor isn't going to be
| hugely interested in "vision" but much more in "the business" -
| what is the potential for selling more of the same?
| jldugger wrote:
| > Wait, this is a startup that doesn't have a strong product
| vision from day 1 and isn't aggressively iterating to find
| product market fit?
|
| You don't see "strong product vision" and "iterating to find
| product market fit" as contradictory?
| atoav wrote:
| As someone who spent half his life in the world of (physical)
| product design: to me this sounds incredibly contradictory.
|
| A "strong product vision" is a _bad_ thing when you are
| "iterating to find product market fit", because most people
| tend to be unable to kill their darlings and do what is
| needed to achieve said market fit.
|
| If your "strong product vision" is really as _strong_ as you
| believe, it should already contain an idea which market and
| target group is ideal -- or if it is a really genius idea,
| this won 't even be necessary because it will create it's own
| market.
| emteycz wrote:
| Perhaps it's a vision of e.g. technology which could be
| applied in many different verticals? I can see the founders
| having a clear product idea but having to find its specific
| applications on the market... E.g. let's say you make a
| database and then you begin looking for companies that need
| your specific favor of database; then there could be
| customization for specific customer needs too.
| iovrthoughtthis wrote:
| depends on how you understand vision i guess.
|
| imo vision is "how is your customers world going to change as
| a result of using your product?" not "this is precisely what
| the product will look like".
| mehphp wrote:
| This made me scratch my head too. I see so many startups come
| up with an idea/product and then try to make it fit in the
| market. That is completely backwards; you need to find a
| problem that the market has and create a product that solves
| that.
| throwaaskjdfh wrote:
| > Why is the startup trying to be a consulting company? This
| doesn't sound like the story of any visionary startup I know
| of.
|
| Why does a successful software business need to be a "visionary
| startup"? Taking on consulting work and discovering the product
| by listening to customers seems like a reasonable approach.
| landryraccoon wrote:
| What are the biggest success stories of consulting businesses
| pivoting to product based companies? I can't think of any off
| the top of my head.
| panchicore3 wrote:
| Salesforce?
| lixtra wrote:
| Basecamp? SAP?
| andrewlgood wrote:
| Definitely SAP. If you believe the movie, Facebook.
| Trello/Stack Exchange (Foghat)
| throwaway9980 wrote:
| Mailchimp
| progre wrote:
| I belive you mean Fog Creek. Foghat is a blues rock band.
| andrewlgood wrote:
| Ha. You are correct
| el_dev_hell wrote:
| Atlassian
| nemetroid wrote:
| I don't understand if you have a contention with the article,
| and if so, what the contention is. You say that this "doesn't
| sound like the story of any visionary startup [you] know of",
| but the article never makes the claim that this is a successful
| path to go down - it is very clear that this is a failure
| story.
| hamilyon2 wrote:
| No, this is more fundamental than that. This customer-revenue-
| project-tean relation and habit holds true even if we have
| vision and understand direction and have strong leadership.
|
| In this case, your customer is more abstract, it could be a
| million people using your, maybe free, or maybe "pay once"
| product, physical or digital.
|
| But then you seek another market because management realises
| that your product will sell to different market, completely
| different million of people. But that will take new
| development. Team 2 is born. It is a project in a sense that
| this team works with one single goal in mind: get the project
| off the ground and start selling it.
|
| This doesn't look like consulting company at all, but the
| problems are the same: technical debt, maintenance, shared
| code, and eventual rewrite and platform.
| hyperpape wrote:
| He says this is common to pre-SaaS companies. So he's mostly
| describing companies started at least a decade ago, perhaps two
| or three.
|
| However, the problems he describes can easily affect enterprise
| SaaS companies in a niche. If your market literally has a few
| thousand potential customers, you could end up in a situation
| where onboarding a big new customer is a double-digit
| percentage of your current revenue. At that point, it doesn't
| matter if you're a SaaS or not, you're gonna feel the pressure
| to do things for the sake of them.
| Closi wrote:
| > Sure, they would love for you to be a cheap outsourced dev
| shop, but that's why your CEO needs to push back and sell the
| vision of the company.
|
| The issue with this is that it means your software won't meet
| that clients requirements.
|
| If you want to go into the enterprise space early rather than
| pivot their later, you can't start by point blank refusing
| requirements from your first big client - particularly as you
| don't know what customers want yet (or more accurately - your
| customers are telling you but you are saying it doesn't meet
| your vision).
|
| The problem is that if you want to break into enterprise and
| aren't willing to make things bespoke, it probably means that
| your MVP is going to be huge for certain types of software.
|
| This isn't a rule for all types of software and things like
| infrastructure provisioning / internal IT tools are different -
| but I can see where he is coming from.
|
| It's also different in terms of selling to the SMB or consumer
| market, where the requirements will either be less-varied
| (consumer) or the customer will generally sacrifice a lower
| match to their functional requirements to save cost (SMB). This
| of course depends on how mature the market is, and in a mature
| market the MVP gets bigger (for example, word processors).
| wayoutthere wrote:
| One of the biggest mistakes you can make as a founder is to
| go after enterprise B2B without understanding it. Companies
| in this space are usually not willing to buy a half-baked
| product. Corporate procurement doesn't like buying from
| vendors without a track record. The hardest part is getting
| your first client -- which is why SMB is the typical entry
| point.
|
| The only companies I've seen be successful starting with the
| enterprise have older founders who have spent a decade or
| more working in the industry and already have the
| professional network and clout to reach their buyers. Without
| that professional network and a track record of delivering,
| you're not going to make it past the front door.
|
| And in these types of environments, consulting / maintenance
| absolutely must be part of the business model. Your customers
| will demand it (or at least demand you have SIs lined up as
| implementation partners).
| Closi wrote:
| Totally agree. The difference in 'enterprise-level'
| software often is _configurability_ and the ability to meet
| client needs without being totally custom (although even
| for the biggest, most feature-rich enterprise software,
| most implementations will _still_ require custom
| development.
|
| Often the problems 'enterprise software' solves aren't
| overly difficult, and if every company worked the same way
| it would be trivial to write the software, but the issue is
| that every company _is_ different, and building everything
| custom isn 't scalable or supportable.
| lifeisstillgood wrote:
| I want to add this to the wit and wisdom of Hacker News book.
|
| The product market Fit thing is just right.
| cratermoon wrote:
| Wasn't if finance that decided that IT should be cost center for
| every company?
| clipradiowallet wrote:
| Finance is an _excellent_ place to start. It 's very common for
| IT directors to report to the CFO - not the CIO or CTO, but the
| chief _financial_ officer. CFO 's are (ideally) great at saving
| money, and it's likely they will begin to do so by pinching
| pennies within IT. Think about that - someone who has an entire
| career around a specific discipline(finance) directly governing
| another discipline(IT). They cannot hope to make informed
| decisions based on the current state of the industry unless they
| are neglecting their primary responsibility of finance.
|
| tldr; yes, "starting with finance" is a good way to transform IT.
| shoto_io wrote:
| In my experience it's a bit more nuanced than that.
|
| My experience is that IT and finance people simply have a very
| difficult time communicating with each other properly. They are
| different type of people and speak different languages.
|
| A CFO will be very open to invest if he's convinced that there
| is a clear return on invest. Many IT folks don't want to
| bothered thinking from that perspective.
|
| If you want to have an easy life learn how to speak with your
| board, especially the CFO.
|
| PS: that's one of the core reasons some IT guys get management
| consultants to do the translation job.
| mistrial9 wrote:
| security; worker health & safety; responsible waste disposal,
| etc... are inevitably costs through the lens of a quarterly
| financial summary.
| andrewlgood wrote:
| They are, as are salaries. Let me propose it this way, how
| much do you think the company should spend on responsible
| waste disposal? 10 dollars? 10 thousand dollars? 10 million
| dollars? 10 billion dollars? Why do you pick the number you
| did? What is the benefit to the company of making the
| investment? Those answers should be the start of the
| conversation on whether to make the investment.
| ajsnigrutin wrote:
| IT is just a cost... it doesn't create anything, doesn't
| produce anything, ROI is zero...
|
| ...but without IT, everything else stops, and usually people
| think about that only when IT departments get so "skinny", that
| things fail... and then they get blamed for that too.
| landryraccoon wrote:
| No company where the core product is technology should have an
| engineering team that reports to the CFO.
|
| At a bank or in retail sure, it may make sense for IT to report
| to the CFO. At a healthcare proivder or insurance company, ok
| sure that makes sense. In that case, IT is really just another
| part of the plumbing because the core product isn't really
| technology anyway. The blog post is moot because the technology
| itself will have a minimal impact on the value added by the
| company, which is elsewhere, and nobody in IT is likely to have
| a seat at the product discussion table anyway.
|
| But at a technology company? One where the core value add is
| software products or services or hardware? I don't believe it.
| I simply don't think that any company that places management of
| technology based core value added products under the CFO can
| succeed. If there happens to be some company out there that has
| this structure, I'd treat them as having a big target on their
| back - they're ripe for disruption by a company where
| technology leads.
| markus_zhang wrote:
| I think it's usually the other way around. Bean counters drive
| IT professionals around.
| EvanAnderson wrote:
| IT reporting to a CFO or a comptroller has been common in my
| experience.
|
| Understanding the language and process of basic bookkeeping and
| simple accounting has given me me immense traction with finance
| people. When I demonstrate even a rudimentary understanding of
| the metrics and reports finance uses (understanding what
| financial statements communicate, tax ramifications of CapEx vs
| OpEx, cost of money, etc) the trust level and willingness to
| listen goes up tremendously. Stand-offish and distant
| relationships became more concrete and productive when finance
| people realize I'm not spouting techno-bullshit for bullshit's
| (or techno's) sake.
|
| Anybody with serious IT management aspirations in the private
| sector really should have a reasonable amount of business
| knowledge. An IT operation, both the in-house and contracted
| services components, should be considered an internal business
| unit. It should be evaluated on the expenses it charges-back to
| the revenue-generating business units, and on the gains in
| revenue it creates by driving efficiency. Knowing the metrics
| that finance will use to evaluate an IT operation allows you to
| make a case for improving those metrics.
| jjeaff wrote:
| That doesn't make any sense at all. What is the thought process
| behind putting IT under finance? Seems like if you don't have a
| cto or cio then reporting to a coo or even ceo makes more sense
| than cfo.
| austincheney wrote:
| IT is a cost center and very expensive.
| xxpor wrote:
| This is fundamentally what Europe especially and some non-
| tech large US firms don't get.
|
| Repeat after me: software development *is not* IT.
|
| IT is the department that hands out laptops and buys office
| licenses from MS.
|
| Software Engineering is a product development group.
|
| They're two entirely different functions.
|
| IT can make sense to have under the CFO, but product
| development almost never does.
| PeterisP wrote:
| Most software engineers are employed in companies whose
| product is not software but something else; and their
| "software products" - which may consume _many_ developers
| - is not a product, but workflow support for the people
| making /selling the actual product of the company.
| walshemj wrote:
| Not everyone makes that hard distinction
| xxpor wrote:
| And that's the problem!
| 908B64B197 wrote:
| > IT can make sense to have under the CFO, but product
| development almost never does.
|
| Just get a CTO.
|
| But seriously, it's always hilarious to listen to non-
| tech companies pitch how they can pivot to becoming a
| "tech company just like Google" while following none of
| the practices in SV. Developers still working for "IT",
| cost cutting and penny pinching. No free food of
| course...
| fallingknife wrote:
| C_O's are expensive.
| austincheney wrote:
| This is only true if you are a software company that
| makes money selling or servicing software. I work at a
| mega bank and we produce tons of software. It's still a
| cost center, a means to an end.
|
| The only distinction I see is that software developers
| want to believe they are somehow more special than
| everybody else.
| xxpor wrote:
| I mean, everything is a means to an end to make money.
| Google isn't selling ad tech software, they're selling
| space on websites to advertise. The tech is just a means
| to an end for that.
|
| The companies that recognize this are the successful
| ones, and the ones who don't fail eventually. Even John
| Deere sees the light here. Why do you think they have all
| of the DRM BS? The value comes from the software.
| orev wrote:
| That's only if you take a naive view of IT (which most
| people do because it's the lazy approach). Laptops,
| servers, networks, email boxes, etc. should all be charged
| back to the departments those are actually being provided
| to. When you do that, suddenly IT is making a lot of
| (internal) money, and the business can see where the costs
| _actually_ are.
|
| IT is also not nearly as expensive as other types of
| businesses that require huge capital investment, like
| farming equipment, factory assembly lines, biotech
| reactors, etc.
| mason55 wrote:
| IMO, if you're going to charge everything back to the
| business units then you also need to provide some kind of
| consulting-style services, or best practices, or
| guidebooks, or something.
|
| Otherwise you lose a lot of your economies of scale
| because each business unit is trying to figure out the
| best way to do things. Or you end up with shadow IT all
| over the place because the BUs come up with cheaper but
| unsanctioned/unsupported ways to do things.
|
| You also need a way to objectively evaluate how IT is
| performing. If the business units are going to third
| parties because IT is unresponsive or overly "expensive"
| then the exec team needs a way to see that. When IT is
| responsible for the IT budget then they have incentive to
| minimize costs and it's easy to do budget reviews. When
| the business units have to pay that budget then IT acts
| as a monopoly with little incentive to improve service or
| reduce prices and it's much harder to find the shadow IT
| that's being implemented to get around bad internal IT.
|
| There's no one perfect answer.
| orev wrote:
| You make very good points. This kind of system only works
| with strong support from the CEO, where everyone is
| firmly "on the same team" and has designated positions to
| play (e.g. IT has to provide the IT stuff). Once you
| allow shopping around within the company or externally,
| you end up in a shitshow.
|
| It's still better than the typical approach, where
| everyone is just angry at IT all the time "because they
| are such a drag with so many expenses". Outside of the
| extremely dysfunctional cases, charging everything back
| to business units is at least the more honest approach.
| tomnipotent wrote:
| > should all be charged back to the departments
|
| I had this fight with my last CEO. She put anything tech-
| related under my budget. Worked with accounting to show
| what the budget would look like if expenses were
| correctly attributed, and suddenly I wasn't spending so
| much money anymore.
|
| Reason she didn't want to change it? So they didn't have
| to explain why expenses changed so much quarter-to-
| quarter during the next board meeting.
| maverick-iceman wrote:
| > Reason she didn't want to change it? So they didn't
| have to explain why expenses changed so much quarter-to-
| quarter during the next board meeting.
|
| Seems like a win-win. Now she knows the reality of the
| enterprise and is okay with the expenses but she feels
| that investors would be bothered by it, so better not
| change anything in order to avoid having to answer their
| questions
| xarope wrote:
| I did that when I was CIO at a non-tech firm; all IT
| costs for hardware, software and services (including ISP
| lines) were apportioned to the various floors and depts
| by seat basis.
|
| 10 years later, my ex-CFO still thanks me for what I did,
| and wish I was still with the company.
| 908B64B197 wrote:
| > Laptops, servers, networks, email boxes, etc. should
| all be charged back to the departments those are actually
| being provided to
|
| Wait there are companies that don't do that?
| orev wrote:
| Pretty much most of them. Anytime you hear people
| complaining about how IT is nothing but a huge expense
| (which is by far the biggest complaint made by business
| people about IT), they're in a company like this.
|
| It seems to be mostly the really large companies who have
| enough of an internal economy where they actually get to
| the point of internal chargebacks.
| papandada wrote:
| This is just a guess, but for some companies at some point in
| their lifespan, finance and IT were the people who sat at
| computers all day.
| andrewlgood wrote:
| When I have seen this done, it is because the CEO does not
| want to get into the details of IT. At that point IT needs to
| report to someone. There may or may not be a COO. Sometimes
| see it reporting to a Chief Administrative Officer (CAO), but
| as landryraccoon points out above, this is not the case when
| technology is the core product of the company.
| Spooky23 wrote:
| Cash is ultimately truth in the business. You can bullshit
| people night and day, but the bank account doesn't lie.
|
| In my experience as an IT person, IT people are almost always
| full of shit when they talk money or roi. Usually when you
| think the tech team has their money story together, it's
| because they are growing and you can hide mistakes in growth.
|
| Once growth slows, you realize there's some dude making $250k
| and nobody knows what he does. Or that you're paying
| $1M/month for AWS charges that you cannot track back to
| revenue. Or that you're running a data center that full of
| end of life equipment that isn't used or brand new equipment
| that was never commissioned. So the CEO brings in the bean
| counters to rein in the nonsense.
| tomnipotent wrote:
| > Usually when you think the tech team has their money
| story together, it's because they are growing and you can
| hide mistakes in growth.
|
| Great insight, and mirrors my own experience a lot.
|
| > you realize there's some dude making $250k and nobody
| knows what he does
|
| I've been through this situation several times as a CTO.
| CEO's can come off as Jekyll and Hyde, one day shouting at
| you to hire, hire, hire and then giving you flak about
| those same hires when things don't go as planned.
| walshemj wrote:
| So just because you know how to count the $ does not mean
| you know or are competent to decide how it is deployed or
| see the bigger picture.
| Spooky23 wrote:
| Agreed, and actually many times the money people are
| complete idiots.
|
| But if you're not growing, the obvious way to make more
| money is to spend less. Many companies get away with this
| for decades.
| rodgerd wrote:
| > roi
|
| ROI and it's cousin TCO _should_ be useful terms, but it 's
| been so twisted and bastardised that it's basically a
| useless metric. Everyone has some bullshit story that shows
| that if you give them millions now they'll deliver a lower
| ROI or TCO.
| SimianSci wrote:
| IT can be a money sink for finance, under the wrong
| direction.
|
| I joined a firm recovering from this very problem. The
| previous IT director spent wildly and justified every
| purchase to finance who trusted their judgement. When the
| bills finally came due it almost put the firm under and the
| IT director left.
| lincpa wrote:
| Development ideas from A Certified Public Accountant:
|
| Computer science is essentially a management science, and vice
| versa.
|
| Follower's success stories: Apple M1 chip + MacOS
|
| come soon: Qualcomm, MS, Intel, AMD, Samsung, Cray, etc.
|
| The Grand Unified Programming Theory: The Pure Function Pipeline
| Data Flow with Principle-based Warehouse/Workshop Model
|
| https://github.com/linpengcheng/PurefunctionPipelineDataflow
| slt2021 wrote:
| IT and Finance report to CEO. If you have clueless boomer CEO who
| doesnt understand what is digital transformation, then nothing
| will help
| acdha wrote:
| If the CEO doesn't listen to anyone who works for them, you're
| going to have many problems. If not, you might want to work on
| your communications strategy: in particular, ask whether the
| problem is that you failed to communicate the business benefits
| from a proposed modernization plan or are just repeating
| consultant babble.
| slt2021 wrote:
| IT and Finance are just executing CEO's strategy and vision.
| A lot depends on hiring - whether CEO/Board is capable of
| hiring competent CFO and CIO. WIth CFO it is easier, because
| finance has been around since money was invented and a lot of
| hard problems have been solved in finance and there is vast
| theoretical body of knowledge backing it up. a lot of it is
| straightforward.
|
| with IT it is hard, because the field is changing rapidly and
| hiring a competent CIO/CTO is harder.
|
| this is why CEO is critical, and he is ultimately responsible
| for the overall outcome
| Vaslo wrote:
| Funny to read this because I happen to work in Finance and many
| requests come through my team. I'm going to add some advice here
| for what it's worth.
|
| A manager once told me that Legal and IT will always tell you no
| before telling you yes. Basically you need to argue and escalate
| to get things done, and it's frustrating. After 20 years I've
| found that pretty true, though my current company is a bit better
| than others I've worked for where IT pretty much said no to
| everything.
|
| Everytime you are going to stop me from writing queries to your
| server, or add more security that makes it harder to do my job
| without sufficient support to rightfully get through that
| security, or deny me the ability to download legit software from
| the likes of Microsoft and other reputable vendors because you
| have some ridiculous amount of red tape, I'm absolutely going to
| question every dollar and be skeptical of how the funding is
| going to help me or my partners in HR, Sales, Supply Chain etc.
|
| If your projects help me, and you help me, I'm definitely willing
| to help you more and fight for you and your budget.
| NullPrefix wrote:
| Did you just admit that you fight legal and IT on purpose, just
| to have a fight?
| ativzzz wrote:
| He chooses to not help people who make his job harder, sounds
| like a normal human being to me.
| 542458 wrote:
| Lots of people make other people's jobs "harder" with good
| reason. Things like code review, legal compliance, IT
| policy, etc are just "overhead" if you assume that your
| knowledge is infallible - but people are fallible and we
| need systems like this that, yes, slow us down in order to
| keep from getting burned.
| Vaslo wrote:
| The overhead needs support. If you put up additional
| security where only IT staff can do x, then you need to
| ask for or transfer headcount to ensure it's just as
| nimble as before. If you demonstrate that ability to
| manage change, then you also demonstrate that the limited
| funds are best in your hands.
| Vaslo wrote:
| Nope, I am saying that there are many individuals in those
| functions that a solution creates more work for them, so they
| default to "no". Hard no's are understood in some cases -
| i.e. installing random nonsense from the internet. However, A
| "No, here's why. But..." is way more helpful and generates a
| lot of respect from business partners.
| conductr wrote:
| I work in finance and think I understand gp's meaning.
| Although the end part sounds like They're playing favorites
| with budget dollars which is essentially where office
| politics comes into play and not exactly in a way that's in
| the best interest of the company.
|
| However, the problem I see is that teams (hr, legal, etc)
| generally can't be trusted to make decent technology
| decisions. They could blow $10M on something that sits on the
| shelf because they were "sold" or worse it disrupts the
| entire organization in the process of a failed
| implementation. Both we see happen regularly throughout the
| organization. Finance is responsible for vetting every
| possible point of failure which is why we are risk adverse,
| or appear so.
| Vaslo wrote:
| I think you captured it more elegantly than I did. I know
| it sounds like playing favorites but consider it's not just
| me I look at out for. If our IT Business Analyst Jill helps
| all the people in our business and everyone raves about how
| helpful she is, I have a lot more trust than the guy who
| scolds his employee for taking calls at 4 that my be issues
| because it's the end of the day and he didn't want to stay
| late fixing issues (I swear on my life another manager and
| I overheard this badgering occur). If it's Jill vs him
| asking for a headcount, Jill is getting it all day long.
| conductr wrote:
| That's exactly what playing favorites is. If his
| headcount is more impactful to achieve company goals, he
| gets it. You need to learn to compartmentalize
|
| If you feel someone is deserving of punishment, they
| should know why and it shouldn't be through your
| budgetary control. It's a misuse of power.
| waste_monk wrote:
| This is a bad attitude to hold. Despite common opinion, most IT
| departments are just trying to meet their own objectives and
| requirements and are not deliberately trying to frustrate the
| users under their care.
|
| >Everytime you are going to stop me from writing queries to
| your server or add more security that makes it harder to do my
| job without sufficient support to rightfully get through that
| security,
|
| I would sincerely hope someone in finance would understand
| separation of duties and generally that being able to
| arbitrarily manipulate a database without any controls is a bad
| idea. Especially if it holds business-critical financial data.
|
| > or deny me the ability to download legit software from the
| likes of Microsoft and other reputable vendors because you have
| some ridiculous amount of red tape
|
| There is no absolutely zero reason why ordinary users should
| have administrative control over their workstations in a
| corporate environment. It's been considered a worst practice
| for several decades, pretty much every IT framework forbids it,
| and it genuinely prevents a vast swathe of issues and limits
| the scope of damage if something does occur. It also doesn't
| matter who the vendor is, installing updates without testing to
| see if they're compatible with your environment is a sure-fire
| way to break things (and believe me, just because they're big
| like Microsoft doesn't mean their quality control isn't
| garbage).
|
| > because you have some ridiculous amount of red tape, I'm
| absolutely going to question every dollar and be skeptical of
| how the funding is going to help me or my partners in HR,
| Sales, Supply Chain etc. > If your projects help me, and you
| help me, I'm definitely willing to help you more and fight for
| you and your budget.
|
| Sometimes IT are required to undertake projects that disrupt or
| inconvenience other parts of the business, but the reverse is
| often true. That's just how things go sometimes. Instead of
| becoming antagonistic, why not talk to IT and try and find out
| why something is happening and work with IT to solve it? It
| will be more productive in the long run.
| wil421 wrote:
| It sounds like you are mad at the security folk not really IT.
|
| No you can't run arbitrary queries that bring my server to a
| halt. No I'm not going to give to access to my API only for you
| to blast my system with some python script during peak hours
| when you can just extract the data in CSV and use a real data
| analysis tool. No I won't support your shadow IT Access DB that
| you created because you refuse to pay for a sql server with
| enterprise grade storage and redundancy.
|
| These are things that have happened to me and I can't imagine
| being in security and having to deal with people installing
| whatever they want.
|
| The reason IT (including security) say no is because we have
| been burnt before and are left alone when someone fucks things
| up.
| Vaslo wrote:
| Then you need to help me write the queries . Then you need to
| help me with the API calls. And yes I will shadow IT all day
| long until you work with me on a better solution then just
| downloading CSV files. If you aren't going to help me and do
| your best to get me a solution, Even if not perfect, I am
| definitely skeptical of your requests and need to watch out
| for empire building. I'm not writing SELECT * queries man - I
| have very specific data requests and have an MS in Comp Sci
| so while I'm far from a DBA, I'm respectful of things I don't
| know. You can't just say "no we aren't writing requests
| today".
|
| I don't think people should install just any program willy
| nilly, but why in the fuck can't I install SSIS from
| Microsoft to help me deal with shitty "here's some csv's"
| service I sometimes get? Literally no reason ever ever to not
| be able to download that.
| cmwelsh wrote:
| > Then you need to help me write the queries .
|
| As it must be.
|
| > Then you need to help me with the API calls.
|
| As it should be, with visualizations of the time-series
| data, if applicable.
|
| Banks are more than ever driven by their tech teams. Tell
| your manager if you're suffering.
| yodelshady wrote:
| >As it must be.
|
| No IT department in the world _has_ that level of
| resource, hence the "cybersecurity skills shortage",
| rolling battles between IT and
| engineering/sales/marketing, and Shadow IT.
|
| The Zen of IT is giving your users the tools and
| knowledge they need and locking off the things that are
| actually illegal. The former use cases no longer bother
| you, the latter cases don't have exceptions to argue.
|
| You are not doing case-by-case support. Ever.
| wil421 wrote:
| Shadow IT is fine for now. The execs will do their next
| Technology Transformation to get rid of shadow IT at the
| advise of highly paid consultants. It will be consultants
| draining your coffers not IT and I can guarantee you it
| will be more expensive than doing IT right in the first
| place.
| FooHentai wrote:
| >deny me the ability to download legit software from the likes
| of Microsoft and other reputable vendors because
|
| Because when your computer screws out and you're unable to
| work, IT is on the hook for your lost time and you get to go
| floppy because 'the network is down'. If IT is responsible for
| ensuring your technology environment supports your
| productivity, which in almost all organisations they are, then
| they need to be in exclusive control of it or they cannot
| provide a comfortable level of assurance to the organisation.
| Responsibility and control go hand in hand. I won't take
| responsibility for anything outside of my control, and if
| you're sane neither will you.
|
| Teams that are willing to confront their organisation's
| established norms and assume responsibility for the continued
| operation of their workstations and the corporate network they
| are trusted members of may be able to gain permission (from
| management, not IT) to get install privileges. If you're in an
| organization that's deployed a zero-trust model this is much
| easier, and you only have to assume responsibility for the
| workstations as the network is already resilient againsts it's
| participants.
|
| Everyone else needs to sit down. If you're not giving me an
| unlimited bank account of the company's money, I'm not giving
| you admin rights; And the motivation for restricting both are
| very similar.
|
| On the other hand, ensuring people have what they need to be
| able to do their job to the best of their ability is kinda the
| point of IT. Unfortunately it's never a simple job to
| distinguish between 'blustering and wants to run a bitcoin
| miner' from 'needs a legit piece of software to do their job
| better' without proper engagement to understand your needs. If
| you have legitimate needs you don't look any different from the
| dickhead in the other department that's taking the piss, until
| we've gone through that 'red tape'.
| tempodox wrote:
| > Responsibility and control go hand in hand.
|
| That can't be emphasized enough. I've seen my fair share of
| situations where people get saddled with responsibility and
| no corresponding control. When that happens, they end up
| being other people's clean-up crew with no time for much
| else.
| sangnoir wrote:
| > If your projects help me, and you help me, I'm definitely
| willing to help you more and fight for you and your budget.
|
| That's a perfectly normal human response - but having to
| schmooze the petty tyrants in Finance for something that helps
| the organization as a whole is why I will _never_ again work at
| a company where my department is seen as a cost center.
|
| Most finance folk are more amenable when the problem can be
| simplified to "if you give money; we'll make more of it" _as a
| first order effect_ ; anything less than that will be mired in
| politics and backroom dealing.
| conductr wrote:
| Profit center all the way. It's true for any job in any
| industry.
|
| > Most finance folk are more amenable when the problem can be
| simplified to "if you give money; we'll make more of it"
|
| This is or should be leadership in general. It's just
| business acumen 101.
|
| > mired in politics and backroom dealing
|
| It's usually just a sorting of all possible decisions. What
| you don't see is how 10x of available budget dollars is being
| asked for by various departments that have no clear financial
| ROI and someone has to decide which investments to fund and
| what can wait. IT as a cost center can usually wait.
| sangnoir wrote:
| > This is or should be leadership in general. It's just
| business acumen 101.
|
| My point is that they can be short-sighted by seeing value
| in things that directly generate money, which is the
| opposite of acumen. Things like "We'll halve the wait time
| on help-desk tickets, making everyone more productive" or
| "We need an additional storage array, we're almost at
| capacity and need head-room" are not money-makers, but the
| finance folk at some organizations treat it like it's
| _your_ personal pet project that you have to grovel for.
| carlosf wrote:
| In my first job as a sysadmin I tried my best to support
| business and two things happened:
|
| 1 - My paycheck did not increase when business was successful.
|
| 2 - When something broke as a result of assuming risks to
| deliver stuff, I was blamed, not business.
|
| So I realized the most rational thing I could do was to become
| a bureaucrat and ended up leaving.
|
| Now I work in a place where business and IT are in the same
| team and have the same financial incentives. I tend to make
| reasonable consesions and business people actually care about
| security and keeping tech debt sane. Pretty cool.
| goforbg wrote:
| I think this is mostly true for B2B SAAS startups but not for the
| rest.
| goforbg wrote:
| I think this holds true mostly for B2B SAAS platforms but not for
| the rest.
| endymi0n wrote:
| Oh god, no.
|
| Finance itself is the worst place to get anything done, since
| their view is almost always a reactive one.
|
| When accounting and controlling are done setting up their cost
| centers, the most logical place from their view would be to fire
| all developers and double the sales team, as that's where the
| money is made.
|
| Risky and unproven new projects with unclear (but potentially
| massive) returns or indirect relations like production engineers
| increasing the productivity of application engineers through
| automation do simply not exist in that world.
|
| Finance is ultimately a completely soulless place that -- just
| like technology-centered nerds -- should defer to a CEO who puts
| all the pieces together into a coherent vision, ruthlessly chases
| product-market fit and a profit-first (but NOT profit-only or
| self-cannibalizing) approach and thus injects business sense into
| all players in their company.
|
| And that includes the finance department, of which I've certainly
| seen some of the most stupid ideas. Like software
| capitalization/activation that did made sense for converting opex
| to capex in the GAAP sheets, but in the end drove all the best
| engineers away because of all the mindless paperwork. Just one of
| many examples.
|
| Finance isn't any more intelligent than the other players in the
| company.
| andrewlgood wrote:
| Full disclosure, I am a CFO and have spent much of my career in
| Finance. I have never worked in a place where I or anyone else
| there thought Finance is "any more intelligent than the other
| players in the company."
|
| This article is disappointing in that it gives the impression
| that one department makes or breaks a company. To be clear,
| there are poorly run Finance organizations in the world and
| they can make the culture at a company less than fun. There are
| also poorly run IT organizations (to include product
| development) that can ruin a company culture. Even ones run by
| a CTO that reports to the CEO.
|
| I have also never seen a company where the CFO does not
| ultimately report to the CEO. I have seen companies where the
| CFO reports to a Chief Administrative Officer (CAO) who reports
| to the CEO. I completely agree that the CEO ultimately sets the
| vision of the company and hires the executive team to deliver
| on it. That being said, a CEO is not Superman/Superwoman. They
| need a team surrounding them to deliver what you expect.
|
| What the article could have emphasized is how software
| engineers can work with the Finance team to better describe
| investment opportunities like hiring production engineers to
| increase the productivity of application engineers. Yes,
| investment opportunities ultimately need to generate more cash
| returns than the investment. This may require serious thought
| around the benefits from increased software quality, faster
| cycle times, increased cybersecurity etc. Importantly the
| analyses do not have to be decimal level precise. But, if you
| cannot describe how your investment opportunity ultimately
| creates more cash flow than the investment required, your
| opportunity will likely not be funded.
| tpuser wrote:
| The finance business area at the last large company I worked
| for was borderline ridiculous. The division I was employed at
| ran a billion in revenue through Excel sheets scattered
| across network drives. FSS had a nightmare of a week at the
| end of every quarter. I was given a promotion and a shift
| from engineering to business analysis with the goal of
| creating a model to predict workforce requirements for
| ongoing business and new contracts. After a few months of
| learning the ropes and the history of similar attempts, it
| became clear that the company already held a license for
| software suitable (perfect) for this goal and the finance
| area was already slowly working towards ditching the excel
| mess in favor of the sane solution.
|
| By "slowly" I mean that they had been inching towards using
| the right tool for years, finding any and every excuse to
| abandon course. The corporate app dev unit explained to me
| that they were wary of working with the finance area of my
| division as finance had repeatedly gone 90% of the way to an
| improved tool only to bail out at the last minute, wasting
| time and money and leaving corp app managers the task of
| explaining why things fell through to their bosses.
|
| The best (worst) excuse given by finance during my attempt to
| sort things out was after we were acquired by an even larger
| contractor. "We're not sure if <company> uses <software>, so
| we're going to need to put a complete halt on the shift."
| They weren't sure? It took me less than a minute to go to the
| acquiring corp's job req page and see that they were hiring
| admins/devs for the software in question. Ridiculous. Finance
| leadership could have made a single call to ask a single
| question, but rather than stepping out of the comfort zone
| they decided to scuttle a project which was all but
| guaranteed to improve their lives and the organization as a
| whole.
|
| I'm close to 50/50 on whether the finance unit was doing
| something dishonest and wished to retain the control provided
| by using an opaque/incomprehensible system or if they were
| merely too afraid of any sort of change by virtue of their
| bean counting nature. Either way, they're probably still
| actively harming the company.
| andrewlgood wrote:
| It is sad how much of Finance (primarily FP&A) gets run
| through Excel. There are many products out there today that
| can make the job easier, but as you point out, not all
| organizations are quick to embrace them.
|
| My personal hope is financial analysts get more tech savvy
| over time. SQL should be a year one skill with Python/R
| soon after. These should complement spreadsheets which
| would still have an important role in ad hoc analyses.
| Combine this increased tech savvy with an understanding of
| a visualization tool such as Tableau/Power BI and I think
| financial analysts could be significantly more productive
| than they are today.
|
| There would also be far fewer spreadsheets lying around on
| the network drives. It is amazing how many of those
| spreadsheets are simply the same model with the next
| month's data. Better use of databases would allow one
| spreadsheet with a database to store the changing inputs.
| tpuser wrote:
| >My personal hope is financial analysts get more tech
| savvy over time.
|
| Probably won't happen and isn't important imo. If
| somebody can dig SQL/Python/R then somebody can get paid
| more to do something other than count beans (speaking
| here of lowest level financial analysts [accountants]; I
| was probably the only person at the division trying to
| make a meaningful financial forecast that was more
| detailed than a top level number with zero transparency.
| I started w/ python but wanted a COTS solution. Didn't
| want to babysit it.).
|
| >Better use of databases would allow one spreadsheet with
| a database to store the changing inputs.
|
| This is the key. The number one complaint of every other
| business area was that forecasts came in asynchronously
| and it was impossible to tell whether what had been added
| or removed was real. Hallway conversations took the place
| of structured data. That's fine for many things, but not
| for projections which determine whether we need to hire
| twenty more engineers or let go of a dozen.
|
| The product that would've solved the problem (and then
| some) was IBM's TM1 (now "Planning Analytics powered by
| TM1"). My model worked well in TM1 and could've been
| extended to being better than a calculated model--the
| direct inputs from the dozens of IPTs could have been
| collected without the need for any math used to back out
| of numbers. No "model", merely the collection of demands
| of every program and every potential contract. The
| program teams already generated all of this data; finance
| threw most of it away while rolling it up.
|
| TM1/PA has Excel plugins which render the change
| invisible to the financial analysts doing the work. Their
| job doesn't change but the organization can hoover up
| more data by at least an order of magnitude, breaking the
| cycle of relying upon opaque, top-level numbers that no
| other business area actually trusts.
| andrewlgood wrote:
| I think one of the communication challenges in this broad
| discussion is what is a "finance" person. Several people
| refer to them as people in Accounting (accountants) when
| I think they really mean Financial Planning & Analysis
| (FP&A analysts). Within most Finance organizations there
| is a big difference. Accountants (particularly early in
| their career) focus primarily on the past and properly
| describing it in the general ledger following accounting
| rules (e.g. GAAP / IFRS). FP&A analysts (should) focus on
| forecasting the future, then looking at what happens and
| describing why it differed from their forecast (variance
| analysis) so they can make a better forecast next time.
|
| I agree with you that it is unlikely accountants will
| learn SQL/Python/R. They are tied to their ERP and Excel.
| My hope is the FP&A analysts will develop the
| SQL/Python/R skills to enable the better/faster
| development of complex models to forecast.
|
| >The product that would've solved the problem (and then
| some) was IBM's TM1
|
| I have not used TM1, but have heard many good things
| about it. Today I hear more people discuss Workday's
| Adaptive Planning than any other product in that class.
| Unfortunately most are still creating their primary
| forecast in a spreadsheet, then loading it into the TM1
| or Adaptive which then has additional rules to build out
| the forecast.
|
| I agree that using these types of products increases
| transparency and speed.
| galaxyLogic wrote:
| The reason I think Excel sucks is that it hides the
| formulas behind the cells. There is no way to get good
| report on the mathematical MODEL written in an Excel
| spreadsheet, far less for a group of them connected
| together.
|
| Or am I wrong? Is there an easy way to get a report that
| tells what a given spreadsheet calculates?
| wombatpm wrote:
| There is an audit feature to follow calculations. My
| truck was to replace all equal signs with QXQ to make
| formulas visible and diffable
| andrewlgood wrote:
| IMHO, you are not wrong. The advantage of spreadsheets is
| they are incredibly flexible. The disadvantage of
| spreadsheets is they are incredibly flexible.
|
| Over the years I have noticed a few conventions that make
| spreadsheets easier to read from a model perspective. -
| Inputs should have their own tab and ideally a name.
| Should also be a color-coded font (blue is popular). - A
| worksheet should work left to right, top to bottom. I am
| always frustrated when I try to work through someone
| else's spreadsheet and the formulas just drift across a
| tab rather than working in a pattern toward a
| conclusion/summary - Pretty print sections should be
| separate from the actual engine. Do the calculations in a
| manner that is easy to understand. Create an output tab
| to create the pretty report. - Flag with a bright
| background color when a formula changes (yellow is
| popular). This frequently happens when your boss asks you
| to create a scenario where you override a formula with a
| constant. I cannot tell you how many hours of my life
| have been lost tracking down an overridden formula.
|
| These types of conventions make spreadsheets easier to
| inherit from someone else. They do not change the fact
| that there can be a lot of calculations happening through
| a multi-tab that you simply cannot see the bigger
| picture.
| Fordec wrote:
| I am at a point where I don't think there should be finance
| departments in tech companies. I also believe there shouldn't
| be siloed data departments for the record either. There
| should be teams, build around a cohesive product goal that
| solves customer needs. There should be someone who
| understands the money side of things embedded in that
| department doing analyses and making recommendations to the
| product manager, not direct to a CFO. Maybe half their job is
| regular market analysis work too if the role isn't _that_
| big. Those product managers should then have in their day to
| day functions a requirement to get that info to a CFO 's
| hands (who is really just the executive teams internal
| finance person) to make their case for their product.
| andrewlgood wrote:
| For clarity, when you refer to finance, I think you mean
| Financial Planning & Analysis (FP&A). I think you would
| agree that centralized Tax, Treasury, and Accounting
| functions are ok and should probably report to the CFO.
|
| With respect to FP&A, I have seen several firms that simply
| embed them within a product line or business unit. They
| need to submit forecasts to a central group, but their
| primary mission is to support the product or business line.
| Fordec wrote:
| Yeah basically but I've yet to work on a team (that I
| didn't build myself) where the FP&A is separated from
| Accounting/Tax and not a direct report to the CFO or CEO
| if the company is pre-CFO. Sometimes even seen
| Accounting/Tax as a direct report under HR with zero
| product connection. So I just hadn't come across that
| term before.
| wtvanhest wrote:
| I have worked in FP&A for the past 6 or so years after working
| in the investment world. For a short time (8 or so months) I
| supported a CIO and had to approve the NPV analysis of every
| tech project that the company did.
|
| The thing that most project managers / engineers don't see is
| that finance's real job is to simplify the story and fact check
| the assumptions so that execs can rely on the investment being
| reasonable. Execs don't care if the NPV is to the penny, they
| care that it makes logical sense and that business leaders
| (brand leaders, region leaders or whoever is SVPsh level)
| supports the project. More than 50% of my time was just talking
| to execs trying to lock down support for other people's
| projects so they could get them done.
|
| Often times when a project get rejected, its not because
| finance made the decision, its because tech didn't get the
| right business leaders on board before asking for a project
| investment.
|
| > Risky and unproven new projects with unclear (but potentially
| massive) returns or indirect relations like production
| engineers increasing the productivity of application engineers
| through automation do simply not exist in that world.
|
| If you do a lot of risky and unproven new projects with unclear
| (but potentially massive) returns, the business will go
| bankrupt and everyone will lose their jobs and equity.
| Incremental, but repeated small and correct bets usually are
| best for driving high returns on capital overtime. Sometimes
| when an intuitive exec sees an opportunity they need to take a
| shot on goal and risk some capital. In those cases, finance is
| kind of out of the picture as the exec needs to stand on their
| own.
|
| > And that includes the finance department, of which I've
| certainly seen some of the most stupid ideas. Like software
| capitalization/activation that did made sense for converting
| opex to capex in the GAAP sheets, but in the end drove all the
| best engineers away because of all the mindless paperwork. Just
| one of many examples.
|
| The opex to capex justification stuff comes from accounting,
| not finance. Its very painful, but the accounting teams must
| follow the law/gaap rules of accounting.
|
| > Finance isn't any more intelligent than the other players in
| the company.
|
| Absolutely correct. Just another cog in the corporate machine.
| If you find yourself frustrated with any cog (co-workers) its
| probably best to talk to them and figure out what you are
| missing.
|
| Most people are trying their hardest.
| rootsudo wrote:
| I disagree, if you're able to understand and do a projection,
| forecast, risk analysis, sunk cost analysis you can easily get
| finance on your side.
|
| The issue is that IT/tech does not know business key words or
| excel spreadsheets, and finance does not know tech. Nowadays
| it's getting blurred with data scientsts and excel crunchers
| that can do a mean macro (and know more than Vlookup!)
|
| Finance people love automation. Finance people love excel.
| Finance people understand sunk cost fallacy. Finance people
| understand change. Finance people need help to embrace change,
| to guide decisions and make sure it's the right "tech" for the
| company.
|
| Many times the right tech is O365/Sharepoint/Flow automation,
| or nintex. Yeah, but
|
| it is not souless, it guides the entire company, it ist he
| company pursestrings.
|
| Get them on your side, understand how to read a P/L sheet, what
| FPA does and you'll not only earn respect, you'll have your
| name said at all the exec/leaderships meetings and you'll be
| loved.
|
| That's what I do in companies (consulting, self run) and w/o a
| good background in finance, and tech I wouldn't be where I am
| today (major in stats, tech was hobby, stats/math is everything
| etc.)
|
| So I fully disagree 100%. You had it so close with SAAS and
| capex vs opex, but you missed it. But yes it does move expenses
| around and opex is easier to navigage then a full sunk cost
| capex.
| jldugger wrote:
| > I disagree, if you're able to understand and do a
| projection, forecast, risk analysis, sunk cost analysis you
| can easily get finance on your side.
|
| The mystery to me is why IT departments run by a CFO are
| notoriously bad at IT. It seems like Finance will take
| cutting costs over increased revenue every day of the week; I
| don't know if they just hate taking on risk, or are just
| hoping someone will convince the board to hire a CIO and
| relieve them of the duties, but the end result is rarely
| pretty.
| webmaven wrote:
| _> The mystery to me is why IT departments run by a CFO are
| notoriously bad at IT. It seems like Finance will take
| cutting costs over increased revenue every day of the week;
| I don 't know if they just hate taking on risk, or are just
| hoping someone will convince the board to hire a CIO and
| relieve them of the duties, but the end result is rarely
| pretty._
|
| In my experience it is simply a reflexive dismissal of
| externalities. If you can get them to model the small but
| real (though fuzzy, so with error bars) costs (eg. higher
| employee dissatisfaction = increased turnover, lower
| productivity = increased time to market, etc.) of each cut
| it works out better: Sometimes the cumulative price does
| it, sometimes the cumulative uncertainty.
| erdos4d wrote:
| I read this comment and I feel dumber.
| clncy wrote:
| Spot in with the automation! Too often people rush to build a
| new system without thinking first about the systems and
| processes that already exist.
| planet-and-halo wrote:
| This is something I've been interested in for a while. Do you
| think it's worth getting an MBA or some other financial
| degree if you're already in the workforce, or can you learn
| enough on the fly?
| andrewlgood wrote:
| I do not recommend getting an MBA or some other financial
| degree. Rootsudo's response is excellent. There are
| actually very few financial concepts involved in these
| types of analyses (e.g. discounted cash flows, IRR, and
| NPV).
|
| IMHO, the best thing you can do is work with someone in
| your FP&A (Financial Planning & Analysis) group discuss
| your investment idea and why you think it is a good idea.
| If they are a decent analyst, they will help build a model
| to describe financially your investment opportunity. This
| is what they live for.
| planet-and-halo wrote:
| Thanks, appreciate the suggestion.
| conductr wrote:
| FP&A agrees. For what it's worth, I never did MBA. I did
| finance undergrad and it just felt duplicative to do it
| again. It can be limiting to an extent but it's also
| meritocratic once you're in. It's a screening question
| for many employers at the manager/director level and up
| but if you haven't built a strong enough network by then
| than something is off anyways. (Make friends with
| recruiters.)
| shnock wrote:
| I would agree strongly with the comment to which you are
| replying (the parent? This is my first time commenting
| :). The primary benefits of an MBA are not the knowledge
| learned and said knowledge is shallow enough that it is
| feasible to gain it without the degree.
| cyberge99 wrote:
| DevFinOps and Cloud cost efficiency is a thing. As more
| orgs move to utility based pricing, understanding and
| optimizing spend and accurately projecting are becoming
| much more valuable.
|
| So, I'd say go for it if it's something you think you'd
| enjoy.
| haser_au wrote:
| I asked the same question a few years ago (tech background,
| needed to uplift my business knowledge/lingo). The response
| was "you should find a way to obtain the knowledge of an
| MBA, without having to do one".
|
| As a result of searching a few years back, I ended up
| buying a copy of "The Personal MBA" and reading it through.
| This comes with the list of 99 business books, listed here;
| https://personalmba.com/best-business-books/
|
| * I have no affiliation with the site, author or book. I'm
| just speaking from my personal experience and the benefit
| of business knowledge this gave me.
| mschuster91 wrote:
| > I disagree, if you're able to understand and do a
| projection, forecast, risk analysis, sunk cost analysis you
| can easily get finance on your side.
|
| That doesn't help against clueless execs who live 20 years or
| more in the past. Japan's cybersecurity minister _literally
| admitted to never ever having used a computer in his life_
| (https://www.theguardian.com/world/2018/nov/15/japan-cyber-
| se...).
|
| Even if you show them that your IT modernization has the
| potential to save the company millions of dollars a year,
| they will decline your proposal because "the current system
| works/no need to upgrade and risk issues".
|
| The literal _only_ way to get banking C-level execs to
| modernize their 70s era mainframe stacks is regulatory
| action. Only with the threat of massive government-levied
| fines or closure of business, they will go ahead with change.
| clairity wrote:
| > "it is not souless, it guides the entire company..."
|
| once, as a pre-mba product manager at a mid-sized company, i
| presented a detailed financial projection (using monte carlo
| on the assumptions/inputs) for a project i was championing
| that went over the head of the controller (and acting cfo at
| the time). boy was i disillusioned after that.
|
| finance should never be thought of as guiding a company.
| that's giving them too much credit and (misguided) influence.
| rather, it should provide analyses to the executive team to
| use to make executive decisions, much like the congressional
| budget office does for congress. it's one of many inputs
| needed to make executive decisions.
| tibbetts wrote:
| Finance is like the engineering department in Star Trek.
| They provide critical resources, and are limited in what
| they can do by the laws of physics, but they still have to
| respond to constant demands from executives to somehow make
| it work anyway. That means they aren't steering the ship,
| but they are going to interpret guidance from the captain
| about priorities in ways that make sense to them.
| DocTomoe wrote:
| Which, incidentally, is the very same challenge IT, or
| Product Development, or HR face.
|
| Trying to think in silos and making departments fight
| each others is a faulty approach. If you want to
| transform business, change has to come from/to be
| accepted by the top.
| nanis wrote:
| > i presented a detailed financial projection (using monte
| carlo on the assumptions/inputs) .. went over the head of
| the controller (and acting cfo at the time). boy was i
| disillusioned after that.
|
| In my experience, it is hard to find people in the finance
| department who understand there are other distributions
| than Normal. E.g., the time I had to spend trying to
| convince finance people that the product of two Normals is
| not necessarily Normal. Or, percentiles of the sum of two
| Normals do not correspond to the sum of the percentiles
| etc.
|
| Yet, they do end up guiding the company because money
| drives everything.
| webmaven wrote:
| _> Or, percentiles of the sum of two Normals do not
| correspond to the sum of the percentiles etc._
|
| I once had to spend a day convincing a CFO that
| consecutive months of ~X% increases of MRR wasn't the
| same as
|
| ((($MONTHS * X) +1) * MRR)
|
| eg. two months of 10% = +20% increase, 5 months = +50%,
| etc.
|
| ... which is how his spreadsheet was calculating revenue
| projections.
|
| How does a CFO not understand compound interest?
| syshum wrote:
| CFO's makes the worst CEO's for a reason.... This has been true
| for all of time, if you work for a company that has a CEO that
| spent their entire career in Finance... RUN
| 908B64B197 wrote:
| > When accounting and controlling are done setting up their
| cost centers, the most logical place from their view would be
| to fire all developers and double the sales team, as that's
| where the money is made.
|
| That's great for long term shorts.
| endymi0n wrote:
| Well it _is_ a common trick for "making the bride pretty" or
| for short-term incentivized CEOs:
|
| You know you've got a top notch DevSecOps team for example if
| everything is smooth, calm and boring -- because most issues
| are automated away. That's exactly the point when you know
| you can safely fire that expensive team, because it'll
| usually take a few years until the automation surplus has
| been exhausted and then a few more until the starting chaos
| has propagated into actual outside-visible incidents.
|
| Makes for a great bottom-line at approximately the end of
| shares vesting.
|
| You didn't get that pro-tip from me.
| avmich wrote:
| > And that includes the finance department, of which I've
| certainly seen some of the most stupid ideas.
|
| I've heard some tales about a town in Michigan - let's call it
| Flint - where water was distributed using some older provider,
| while some newer company existed which charged less. A newly
| hired CFO decided, logically, to save some funds by going to
| the cheaper one. CFO didn't know that pipes in the town were
| made in the old fashion (lead metal?) and the new company,
| which used iron pipes, used some chemicals in water which
| helped to keep pipes clean. This chemical wasn't used by the
| old water supplier. When flown through old pipes, the chemical
| caused dissolving the lead into water. By the time the
| population of Flint switched to bottled water for everything
| the CFO was long gone with earned bonus for saving money to
| town.
|
| I wonder what such stories, if true, teach us for the future.
| Just general mistrust towards financiers doesn't look quite
| right...
| clairity wrote:
| > "Just general mistrust towards financiers doesn't look
| quite right..."
|
| financiers, including startup investors, focus on money above
| all else, and that alone justifies mistrust (aka skepticism).
| with that kind of focus, it's inevitable that decisions are
| made selfishly and greedily. that doesn't mean it's a tool
| that can't be wielded for generally positive outcomes, but
| that the deck is (intentionally) stacked against it. beyond
| that, the flint situation sounds like a real failure of
| leadership all around (at the very least, basic due
| diligence/risk analysis). that often happens when decisions
| are made far removed from the expertise needed to make them.
| thaumasiotes wrote:
| > I wonder what such stories, if true, teach us for the
| future.
|
| That if you're looking to maintain [water] quality, you need
| to have monitoring in place.
|
| Switching to the new provider was a good idea, not a bad
| idea. There is no way to keep track of everything that might
| have happened in the past that might be affected by
| unspecified changes in the future, so there can't be an
| expectation of doing it either. But you can watch what kind
| of results you're getting.
| drunkpotato wrote:
| _Whoosh_
| avmich wrote:
| You might be right. Or not too much - at least for me, when
| I heard that story, this particular decision seemed odd -
| surely such obvious ways to save on expenses were
| considered before, so why they were rejected? In general,
| if something seems good on the surface it doesn't
| necessarily actually is - and in complex systems, like a
| town, some checklists - I'd expect - should be followed.
|
| But I agree that we might lose track of why some decisions
| were made. Yes, we may want to revert old decisions,
| sometimes even have to. Just some responsibility, which
| comes with power.
| whatshisface wrote:
| Switching to the new provider was a bad idea, because it is
| not that hard to find competent civil engineers who could
| tell you that rather than being a mysterious unquantifiable
| risk, putting the new chemical in the lead pipes would
| cause a problem. "Every decision that went badly was a good
| decision if it seemed good at the time," only holds water
| when it's not easy to figure out in advance what's going to
| happen. After all, to a sufficiently ignorant person, 50%
| of all decisions seem better than average.
| xiezhifeng wrote:
| Agree, so my best choice is start from value stream. Culture is
| not specific.
| draw_down wrote:
| Grow up
| hdvpp wrote:
| Manage cash flow in a unpredictable ever changing environment
| for a month and come back and tell us what you think a finance
| dept does cause from the comment its quite clear you really
| dont know.
| lifeisstillgood wrote:
| Perhaps here would be a great place to let a few hundred
| developers know.
|
| It's worth differentiating between _allocation_ and _flow_ -
| a million dollar spend can be hard to allocate to Project X,
| Y or Z. But it is usually simple to see it got spent on
| Developers, Sales people, rent, hardware licenses etc.
|
| As the film says, if you go up high enough, there is only one
| man with one budget.
| andrewlgood wrote:
| And that man/woman is the CEO.
|
| Cash flow is the actual movement of money - paying payroll,
| paying vendors, receiving cash from clients (not just
| sending out the invoice). Lack of cash flow is what makes
| companies go bankrupt.
|
| Allocations are methods to attribute income and/or expenses
| to groups. It may be something simply such as dividing up
| an enterprise software license for email by the number of
| employees and allocating that expense to their department.
| It can be more difficult / squishy such as how to attribute
| brand marketing spend to various product lines. Generally,
| companies use allocations because they are trying to
| understand the profitability of something (a product,
| geography, client, etc).
|
| Your example of the million dollar spend is a good one.
| Very easy to see where the cash flow went (Developers,
| Sales people, rent, etc) but the important question to
| assist on future investment decisions is how much should be
| allocated to Project X vs Y vs Z. One would also need to
| understand how much cash was generated by Project X, Y, and
| Z so they can determine the ROI (Return On Investment) for
| each project. Knowing the ROI is important in making future
| investment decisions.
| blihp wrote:
| Computers first came into many companies via the Finance
| department way back when because they recognized what computers
| could do as glorified calculators, spreadsheets and accounting
| systems.[1] IT departments were often an outgrowth of those
| early systems. The only 'trick' to dealing with finance people
| is being able to draw a direct line between a proposal and
| either increased revenue or decreased costs. For solutions that
| can do that, they are often your best champion short of having
| the CEO already on board. For solutions that require a leap of
| faith/vision/creativity, they're probably not the place to
| start.
|
| [1] Who do you think the numeric keypad on 'full size'
| keyboards popularized by the IBM PC were for? Accountants.
| Granted, word processing was the other early use case... that
| Finance signed the checks for. IBM understood their customer.
| cratermoon wrote:
| > Computers first came into many companies via the Finance
| department way back when because they recognized what
| computers could do as glorified calculators, spreadsheets and
| accounting systems.[1] IT departments were often an outgrowth
| of those early systems
|
| And yet, somehow, IT departments ended up getting classified
| as cost centers by the finance department.
| blihp wrote:
| If they don't directly contribute to the bottom line,
| that's how they should be classified from an accounting
| perspective. There are at least a couple of ways IT
| departments could avoid that fate: having internal
| customers pay for their services independent of the cost or
| directly managing projects that otherwise contribute to the
| bottom line. It's rare, but it does happen.
| krishvs wrote:
| Wow - the 4 stages of product development seems quite spot on
| from my experience working on b2b enterprise software products.
|
| No doubt that the Finance team is generally the most powerful
| entity in shaping a companies direction both internally as well
| as in your clients organisation. Finance teams love control, are
| (mostly) completely risk-averse and change averse. The same can
| also be said about badly run IT teams.
|
| I have seen product/automation implementations being deployed
| seamlessly in all departments from operations to procurement but
| completely fail due to the finance teams. In extreme cases I have
| seen finance teams have so much power that they even override the
| CEOs decisions to make implementations fail if they feel that
| they are loosing control or do not like the new process workflow
| that the implementation brings in.
|
| For digital transformation projects the implementation team needs
| to speak the language of finance, operations as well as IT.
| Otherwise the chances of the implementation really succeeding is
| close to nil.
| underwater wrote:
| I worked for a company where capex was cheap and easy and opex
| was hard to get.
|
| So engineering managers would pitch a project, fund a bunch of
| consultants, get a massive piece of tech built and then fail to
| support it. They knew the downsides, and wanted to build long
| lived teams that built and support and evolve products, but there
| was too much push back from finance and IT.
|
| I realised that the company would prefer to spend two or three
| dollars in capex every year than a dollar of opex. This helped me
| understand how and entire industry of overpaid an underqualified
| consultants existed.
|
| So my question is, where is that accountability for the finance
| function? Their controls and constraints caused the company to
| flush huge amounts of money down the drain, just so their books
| could have numbers appear in the columns they wanted.
| webmaven wrote:
| _> I worked for a company where capex was cheap and easy and
| opex was hard to get._
|
| This is sometimes the same in the public sector.
| Oversimplifying: capex can be funded with a bond, but opex
| increases come from taxes.
| catmanjan wrote:
| Was capex preferred due to preferential tax treatment?
| andrewlgood wrote:
| No. You actually get better tax treatment for opex as you can
| record the full amount of the expense immediately as a
| deduction against your income. Capex spreads the
| deductibility of the expense over years.
|
| As I mention above, opex vs capex is usually a compensation
| issue.
| andrewlgood wrote:
| This is not a Finance function issue. Finance has absolutely no
| preference between opex and capex. There are accounting rules
| that determine the appropriate classification and any
| reasonable CFO simply wants it done correctly.
|
| The opex / capex argument is about compensation. Opex reduces
| income immediately while capex gets spread out over the
| projected life of the asset (software, power plant, computer,
| etc). By shifting items from opex to capex, a company
| temporarily increases its net income. Increasing net income
| often leads to higher bonuses.
|
| This is what drives the silly behavior. To make matters worse,
| once a company goes down this path, it cannot get off as it is
| usually evaluated on a year-over-year basis.
|
| As for accountability, CFOs of public companies can be found
| criminally guilty (i.e. go to jail) if they not only commit
| accounting fraud, but simply do not establish a robust enough
| control framework to ensure the financial statements are
| correct.
|
| CFOs are always accountable ultimately to the CEO and sometimes
| to the Board of Directors. If you think the CEO was unaware the
| company was spending "two or three dollars in capex every year
| than a dollar of opex," your either mistaken or you had a
| clueless CEO.
| underwater wrote:
| This was an independent, but publicly funded, company. So a
| combination of cluelessness and perverse incentives.
|
| My snark comes from the fact that in this organisation it was
| taken for granted that the CFO has a seat at the table
| because, after all, finance is a thing that grown-ups do.
| It's serious business. Because they have control of the money
| they can dictate how the rest of the organisation does their
| job.
|
| But in reality, they're kneecapping the rest of the company -
| the part that is actually producing something - so that they
| can make some imaginary number appear in the right place.
| They're they ones playing made-up games.
| andrewlgood wrote:
| It is unfortunate you had such a bad experience. It's even
| more unfortunate that there a many more such companies out
| there.
|
| As a CFO, I want to earn a seat at the table where
| decisions are made. Finance frequently has access to a
| significant amount of data about the company and if the
| Finance team does it job well, they turn that into useful
| information. Bringing key information to the executive team
| (and entire company at times) to facilitate the decision-
| making process is one part of how to earn that seat.
|
| Finance does not have all of the information. The
| Technology (IT/Engineering/Product Dev/etc) team will have
| a unique perspective. Marketing will have a unique
| perspective. The People team will have a unique
| perspective. I think a company with a strong culture
| figures out how to embrace all of these perspectives and
| collaborates to develop world class products and services.
|
| Finance does get tasked with evaluating the ROI question -
| does the proposed investment opportunity create more
| financial benefit (can be expansively evaluated) than the
| investment. That should be to ensure a consistent process
| and is frequently because Finance is viewed as independent
| from the group requesting the investment.
|
| A good CFO, heck an average CFO, wants to support good
| investments. It is always more exciting to say 'yes' than
| 'no' and importantly the company grows by making smart
| investments. I have never seen a compensation structure for
| a CFO that provides for increased compensation for always
| saying 'no.'
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