It’s a little bit like that old saying about death and taxes. When you take on an IT Finance transition as fundamental as creating cost transparency around IT services as part of launching IT-as-a-Service (ITaaS), pushback is bound to happen.
Consider this recent scenario at EMC:
Our IT Finance operation had worked for months to get ready for the shift from a centralized, cost-center-based IT budget to a financially-transparent system in which individual business units would be charged for the IT services they consume. It is a crucial piece of EMC’s transition to an ITaaS model. (Read IT-as-a-Service: Guiding Principles for Achieving Financial Transparency)
We created and honed our service-based cost strategy, mapping all the costs associated with each ITaaS service offering across functions and IT groups. We communicated and re-communicated to the various business units we serve that financial transparency was coming, using road shows, conference calls and a steady stream of messaging collateral.
By the end of 2011, we had a chargeback process defined, with prices and cost forecasts for each business unit. For 2012, we assured users, they would be allocated the funding for the core IT services they currently use, making the impact of the initial chargebacks net zero.
In January, we were pretty much ready to execute forecasts and cross charging for core IT services when we hit an unexpected roadblock—a major business unit with offices around the world was balking at taking on the IT charges. Not only did our message not effectively filter down to many of their ranks, but they were also not convinced the new process had any value for their operation.
They were under a tight deadline for other operational priorities, they noted, suggesting that we delay our timeline to pursue the chargeback initiative.
Since that would have put our efforts off until late March, we needed to find a way to address their concerns and get them on board with our priorities.
Long story short, we spent two weeks in January and February talking to as many of that major business unit’s controllers and analysts in as many locations as we could to discuss their questions and concerns and underscore the importance of the chargeback process.
We listened, but we made it clear that the financial transparency effort is a company priority backed by top executives and an important first step to a critical IT initiative. While we did agree to hold off on launching the chargeback process until late February, we required that invoices for both January and February be processed at that time and that cross charges be entered monthly after that.
It was an effective compromise, but we still have to work on proving to some of these leaders that financial transparency is the first step in a process that will bring value to their business.
In the meantime, we gained some important insights I’d like to pass along.
For one thing, if you’re transitioning to financial transparency at a sizable, international company like ours, expect some issues to crop up that you didn’t envision.
We, for example, didn’t realize when we slated the chargeback process to begin in January that the business unit in question would be in the midst of a demanding process of setting annual goals. Adding IT chargeback numbers to the mix greatly complicated the effort for this group, contributing to their pushback.
We also realized after the fact that one reason some of our messages didn’t filter down to everyone impacted by the chargeback launch was that this particular business unit has a complex structure from country to country that made getting the message across difficult. While we did a lot of communicating and kept our message simple and to the point, we primarily focused on Corporate Finance and some functional financial groups. The message wasn’t necessarily getting to the right people throughout the broader financial community. In retrospect, we probably should have done more communication earlier with a bigger swath of financial folks.
What helped in resolving the pushback dilemma was using existing positive relationships with controllers to talk it out and come up with a solution. Another positive was making sure to address any objections that arose right away.
We actually had a couple of groups that were adamant about not doing the required chargeback entries who later told us that our willingness to immediately talk to them about their objections and concerns really helped resolve the conflicts.
It just shows that being willing to talk, listen and work together to move forward are the best tactics in pursuing financial transparency and just about any other change your organization takes on.
Below is a summary of some fundamental strategies in addressing pushback for your project.