For most CIOs the job of managing finances for the entire enterprise is beyond either their skill set or their professional interest. The IT budget can get complex enough when multiple projects and cost centers are vying for attention, so applying some of the outlook that's second nature to the CFO can help put complex budgets into perspective.
Mike Quist, vice president and CFO of WEA Trust, a Wisconsin health plan, has experience managing complicated budgets and multiple priorities. Quist says that he looks for predictable costs which ideally produce the best value for the lowest total cost of ownership. That's certainly a place to start with any expense evaluation.
A significant component in determining where to put the dollars is consideration of the associated staffing requirements. Quist says, "I don’t believe in building what can be purchased unless there is a cost-justified competitive or business reason for building. Software vendors and infrastructure delivery companies have the benefit of leveraging their costs over many clients." In general, costs to achieve necessary service levels are more predictable when buying versus building.
When weighing whether to buy or build, the decision can boil down to reflecting on what the core business of the enterprise is. Quist believes, "If your IT department employs more people than any other department in your organization and you are not a software company, you are going to have competitive challenges." A good CFO will always be looking at the numbers as the driver to the decision rather than at the specifics of the project. For a software development company, the numbers would favor internal staffing, but building a staff to support services that are available from external sources deserves a hard look.
