Let's get creative

How deep do IT managers really want to get into the details of financial accounting for IT purchases? Isn't that better left to the bean counters? Would you rather discuss capex and annuity structures, or rent Gigli on DVD?

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Well, the Robert Frances Group seems to be saying that you should pay more attention to this stuff. In the group's recent research note, "Best Practices for Creative Financing," analyst Adam Braunstein basically says IT managers often forget that everything's negotiable and end up leaving a lot of value on the table. And, no surprise here, they often lack the accounting skills to sweat these details -- and need to work closer with the geeks in finance who do.

"Most IT executives are unaware of the payment options available from vendors," Braunstein writes. "Vendors should be made to compete aggressively on financing terms, just as they are on price and SLAs." Specifically, the report suggests pushing back on up-front payments, using a subscription model to better match payments to delivery of value, and bundling purchases to get deeper vendor discounts.

Of course, you don't want to get too creative with your financing, to the point of understating your company's capex or operating costs. But on at least one point Braunstein hits the mark: It's not just about reducing your TCO for IT purchases, it's about aligning incentives so the vendor is held accountable for performance. Find the financial structure that will motivate your partners to be the best they can be. Call it financial IT architecture -- hmm, a new IT job description?

Goodbye, central: Forrester Research this week does a nice rundown of the pros and cons of tightly centralized AD (application development) organizations versus AD organizations more in the orbit of decentralized BUs (business units). It's the age-old debate. Centralized AD gets you better resource utilization, skills development, standards, compliance, and reuse, notes Forrester, whereas decentralized AD makes for better alignment, subject-matter expertise, streamlined processes, and simplified project management.

But which way is the wind blowing? Forrester says enterprises are trending toward a blended structure (see chart, above). But the report fingers three factors that often tip the balance: culture, politics, and geography. Who's got the budget? Who's got the power? Who's got the street cred? In that tug of war, I think I know which side I'll bet on these days, and it ain't central control.