Blue Money vs Green Money - IT Portfolio Management
Transcript
hey I was going to keep Townsend from the CTO of Iser comm we're going to talk blue money versus green money isn't money all money well that's that depends on whether or not you're trying to make a total cost of ownership argument to your CFO slash CIO and their MB owes related to either investment or saving money one the surface you'll get argument from most IT vendors that somehow their product or service will save your organization money and it will be a ROI return on investment of months or a little bit over a year if you were to outlay the cash to buy their product of service let's take a hundred thousand dollar software investment for example on surface both examples seem similar but there's two different outcomes from the CFO perspective let's say you make $100,000 investment of real hard money to buy a software product that will save $10,000 a month the CFO really easily understands this they are going to not write your department or a company X Y & Z a check for a hundred thousand dollars a year for five years saving a total of four hundred thousand dollars over the original hundred thousand dollar investment green money our money easy to calculate now let's talk about this other savings this efficiency savings an administrative overhead that we hear a lot this is at the director level if your director and you have a department of ten people and these ten people are working really hard and over capacity and you're not meeting the needs of the business and the same software vendor comes in and says you know what we will help you gain efficiency you spend a hundred thousand dollars no over a five your period you got to spend this hundred thousand dollars every year so there's not a hard savings but from a soft savings perspective yours your employees will free up $10,000 a month of time so that you can redirect those efforts in another area we hear this all the time we see storage administrators become cloud administrators and there's no net new cost to the business in order to do that with however when you go to your CFO to make that argument you say hey mr.
mrs. CIO or CTO or CFO I'm gonna spend a hundred thousand dollars every year for the next five years and it's going to save us four hundred thousand dollars in labor CFO may actually the question okay so are you saying you're gonna reduce your headcount by a hundred thousand dollars a year like no I'm going to reposition those assets to work on a different project CFO's MBO what they're measured on may be the hard savings if the company is in financial districts and they have to identify a million dollars a year in hard savings this does not do that for them they're not opening new recs for you to do the new work so you're not saving the CFO any new money so bottom line blue money green money CFO's really understand green money they speak that language blue money while they have an appreciation for it it doesn't help them with their bottom line the best way to go about getting a project like this funded is to go in with another business unit and talk about the total value of a of a business outcome that this project or product will help support that's it for this episode of the CTO advisor you have questions around this you have a different perspective you could communicate with me online at sea televisor on twitter the CTO visor comm is the website we'll talk to you next CTO DOS
