A New Series of Finance and IT Posts

I have just posted a series of blog posts that are intended to paint a picture of IT finance for the future. They are related to one another in interesting ways (and hyperlinked, of course) so I thought I would lay out the full picture here. The ideas have emerged over a series of conversations I have had with others at re:Invent and over the last few weeks. The picture that emerges, I think, is one where decisions to invest in IT capabilities can be made with better data and in a way that supports innovation and growth, even while reducing costs. Here is how I have framed the discussion:

The Digital CFO

This post discusses the ways in which the CFO role is changing as we move into the digital world. Although every enterprise and every CFO is different, CFOs in general have been forced over the years to focus on cost reduction and backward-looking financial reporting. The digital CFO, on the contrary, is a driver of enterprise strategy and competitive advantage.

Decisions at the Margin

It might be a tiny bit of an exaggeration, but I’d like to say that we have been thinking in absolutely the wrong way about how to make spending decisions in the digital world. Instead of thinking about total costs and average costs, total returns and average returns, we should be thinking about marginal costs and marginal value. This piece explains my idea.

Micro-Optimization: Activity-Based Costing for Digital Services?

IT folks know that each digital transaction is actually conducted by a variety of digital services behind the scenes; that is, a digital set of activities that work together to accomplish the transaction. Now, through the magic of serverless computing, companies can actually assign costs to each of these digital activities and work to manage them. The result is greater transparency, lower costs, and better decisions—and not just at the technical level. Think: customer profitability analysis, transactional profitability analysis, and transactional activity profitability analysis.

Introducing FinOps—Excuse Me, DevSecBizFinOps

When you put these pieces together, it makes sense to devolve responsibility and accountability for cost control to the teams that are delivering digital services. Here’s how it could work and what you need to do to get there.

–Mark

@schwartz_cio
A Seat at the Table: IT Leadership in the Age of Agility
The Art of Business Value
War and Peace and IT: Business Leadership, Technology, and Success in the Digital Age (now available for pre-order!)