By James Denena, Chief Financial Officer at Snow Software 

As we face continued uncertainty around the future of work, one thing remains clear – economies across the world are, and will likely continue, to face the ongoing ramifications of the pandemic. In order to say afloat, organisations industry-wide are currently getting to grips with the impact on their businesses and assessing how best to adapt to the uncertainty ahead, which will require greater collaboration across all departments.

Especially in the current climate, many Chief Financial Officers (CFO) are working closely with CIOs, and IT teams to understand and optimise technology investments, both to provision remote work in the short term rapidly and to ensure financial stability in the long term. Technology can be leveraged in times of uncertainty to improve business agility and identify efficiencies, much more than most organisations give technology credit for.

With this in mind, here are some of the things that many CFOs, myself included, have learned along the way that might help IT leaders enhance conversations with finance teams to better position or protect changes to their strategic priorities, planning and budgets.

Identifying Current Investments And Business Needs

As business priorities continue to shift in the current climate, implementing cost optimisation measures can be challenging. Still, one of the first steps for every department – including IT – is to understand the current investments and contractual commitments. Every finance team will likely ask about this, but we also recognise that this can be a difficult request for some teams as we don’t always speak the same language. Consider starting with simple questions like:

• What are we paying for? A good place to start is your invoices
• What is actually being used? And what is critical right now such as teleconferencing, collaboration tools and cloud instances?
• How much are we really using? And are we getting value from our investments?
• What do we own? This would cover on-premises data centres, laptops, desktops, etc.

Once you have shared visibility of the corporate technology ecosystem, the next natural conversation will be around contractual obligations, including renewal dates and cancellation rights. This insight between IT and finance can be crucial and, as potential decisions are made, opportunities to positively impact the bottom line could be identified and potentially remove the need for redundancies or further cost optimisations.

Identifying What Business-Critical Means For Your Organisation

Prioritisation is undoubtedly something that both finance and IT can relate to – whether it’s reviewing tickets that indicate an outage, versus a user error or approving an invoice before the due date. The same principle applies to identify cost optimisations. Finance will likely ask IT to provide details on which resources they deem to be essential, and that generally means which tools are critical to running the business versus those that are more of a nice to have. You may already have this list well developed if you’ve had to update or revert to your business continuity plan recently. In addition to business-critical, you will want to understand which tools can be better leveraged to reduce cost and waste within the organisation.

As both IT and finance teams gain a clearer picture of the organisation’s technology landscape, usage data and user behaviour become essential. In some cases, by understanding usage data, finance and IT teams may be able to review underutilised resources and implement centralised tools across other areas of the organisation – cloud capacity for example – or if applications should be consolidated in favour of a similar, yet more widely used tool. The more data and insights that can be garnered, the more strategic and timely decisions can be made.

Scenario Planning

A lot of finance teams are busy doing a lot of scenario planning right now. There is a necessary and robust bias towards action in this climate, and these plans allow businesses to be more agile, regardless of which direction the market heads. The objectives of scenario planning is to answer questions such as: How much uncertainty is out there? What is the severity of the impact that we will see? How long could we feel it? And be prepared to act quickly when visibility improves.

Here are a few good things to know about scenario planning from an IT perspective:

• Baseline scenario planning:It is important to establish a scenario that could be the most likely outcome. Many people use the 50/50 rule, meaning you could see a 50% probability the results come in above the predicted outcome and a 50% probability the results come in below. Of course, every organisation may need to alter this mix to better reflect their own risk profile, and in fact, this is often the time when many will shift to more of a 60/40 or even a 70/30 type view.

• Upside scenario planning:This plan looks at a short-term impact and the potential for a surge in demand for an organisation’s products, services or solutions. In this scenario, if finance believes a positive outcome is likely, it may be important to consider resources that IT may need to meet potential future demand, such as expanding users’ seats or increasing licenses. As such, it would be prudent to secure certain resources and renew contracts with software, applications, hardware or cloud vendors. If these resources are deemed critical, you get favourable terms if you can commit to a higher volume or length.

• Downside scenario planning: This plan supports a decreased demand environment over a sustained period. This could also be the result of a cascading effect of one market impacting another. If this scenario plays out, finance will look to all areas of the organisation to optimise spend as quickly and aggressively as possible, but with a prioritisation on actions that will have the least operational and human impact. One area that I often see organisations make mistakes with cost saving is that they think optimisation is always about reducing spend in every category. I would urge businesses to look at the investments that will allow you to reduce more cost elsewhere and improve your people’s efficiency, ultimately helping the business through difficult times, but also coming out the other end more efficient and stronger.

Ultimately, scenario planning is only as good as the data. Anything the IT team can do to provide actionable, fact-based insights will result in better decision making for the business.

Don’t Lose Sight Of People And Customers

Amid all this market uncertainty, many organisations are trying their hardest to safeguard employees and avoid cutting staff. Good visibility into key metrics on performance, with the right financial protection and governance in place, will ensure a strong foundation for business. Every function has a key role to play here, but IT is critical to ensuring employees have the right business solutions and the right data, provisioned as efficiently as possible.

Efficiency isn’t always about cutting costs. If new tools are needed in a cost savings environment, outline how it will offer a return on investment by expanding capabilities or improving productivity. For example, new technologies could ultimately free up employee and reduce the time spent on manual tasks. In turn, employees can refocus their efforts on to more strategic initiatives, which – certainly makes the case more compelling for finance teams.

While broader cost optimisation efforts may be under consideration across the business, it’s also important that organisations never forget about how they serve their customers, their partners and their wider community. Investing in the resources for customer service or support teams may be something that IT should prioritise when evaluating technology requests.

The only constant is change. Navigating change effectively requires cross-functional collaboration, pragmatism and agility – all supported by powerful and shared data insights. IT teams that foster a strong partnership with finance are in the best position to help their organisations adapt quickly and securely, no matter what new challenges arise.