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Managing Upwards: The Challenges involved in the CIO-Finance Directors relationship

by David Bicknell



Introduction: a question of credibility

It’s a challenging time in the public sector. Money, as always, is tight, and every part of the organisation, particularly in local government, which has seen reductions in central government funding of typically 60%, has to be seen to be pulling its weight.

And yet, more often than not, if you talk to many public sector organisations about the value of IT, you’re almost certain to find someone that will turn their nose up.

In truth, IT rarely seems to engender much love. There is little doubt of how important IT is to the basic running of an organisation – in local government, for example – and indeed, how important it will become in the necessary move towards digital transformation. But leaders within IT often feel undervalued and the business – often distant in its approach – often feels that it does not understand the value of IT. At best, there is a disconnect or a misunderstanding. At worst, there is a freeze in relations that in many cases isn’t going to thaw unless the personnel change.

So, under the working title of ‘Managing Upwards’, I decided to write a set of articles to explore this ‘value of IT’ debate and, unusually for an IT focused paper, I went to speak to ‘the business’ first.

The Chartered Institute of Public Financed and Accountancy (CIPFA) introduced me to Mike O’Donnell, a prominent former Director of Finance and Executive Director of Corporate Services at Camden who gave me a useful perspective about shared services; to Chris Naylor, the chief executive of Barking and Dagenham, who is an influential figure for London council finance directors; and to Graham Cadle, who was the corporate director at Croydon. To keep some semblance of balance, I also spoke to David Tidey, the head of IT at Richmond and Wandsworth Councils.

Reasons to disconnect

Naylor, who has been chief executive of the London Borough of Barking and Dagenham since February 2015, says local authorities that are in the business of modernising or transforming, doing things differently and cheaper, have tended to structurally align their IT capability either literally with their finance colleagues, or through governance with finance people.

Naylor suggests it was the vogue 10-15 years ago that all the directors of finance roles suddenly became director of resources roles, with that person usually being a CIPFA accountant. Sometimes, however, those directors of resources were not accountants by profession.

Usually as part of the management team, there would be a head of IT, and then a transformation person, project management office and all the things that go with it. There is a general recognition in local government that those two functions need to work hand in glove, says Naylor, adding that, “every finance director worth their salt at the moment is chasing down opportunities to reduce revenue costs. It is our revenue budgets that are most under pressure.”

Getting IT right within the public sector is so important because imagine what happens when you don’t: consider an adult social care department where the social care systems start operating painfully slowly or start crashing.

That can have a significant impact on real lives. It also leads to basic problems around productivity and compliance. On productivity, what is the benefit of getting the management right? It means fixing system slowness and calculating the savings. Imagine slowness is costing a loss of 30 minutes’ productive time a day. For 150 people that equates to 75 hours. Take a cost of, say, £20 an hour. Then that amounts to £1500 a day in lost productivity. Or £375,000 a year.

As for compliance, when systems become slow, people stop working in frustration and eventually IT’s reputation suffers. Don’t you just hate calling up an organisation only to be told to call back later as the systems are running slow? Your immediate thought is, “Sort it out.” If only it were that simple.

In one instance, a Council cabinet member recently shared with local government IT supplier Quadnet how she had suffered from unusable child protection systems, while her colleagues in IT were unable to ease her frustrations. She painted a vivid picture of staff creating their own local and unconnected spreadsheets because the official computer organisation programs could not be relied upon to even be available, let alone speedy, for the inputting and sharing of important data.

She could see that the children she was trying to serve were being put at increasing risk, while the council itself was in danger of breaching its compliance requirements. And eventually, possibly, its data protection requirements too.

Take another example. The Revenue and Benefits department does important work in helping the vulnerable receive council tax credits and housing benefit. A useful measure of throughput and efficiency for senior managers is to look at the claim turnaround. This is a because if as senior managers you know that claims are being turned around quickly, it gives certainty to supporting the vulnerable. That said, a less effective measure would be the number of claims coming in. What is important is that the measure has to be aligned to the purpose and the purpose must be established before putting KPIs into place.

Paradigm shift

So, what is the purpose of IT? Is it simply efficiency?

In today’s austere times, IT departments are under pressure to find savings. Business as usual won’t do. They often do so by squeezing contracts, and then removing suppliers. This may have the impact of making savings, but at the cost of stopping people working. In general, that is not a great trade off. The IT department could save £1m in IT costs yet cost £30m pounds in productivity. That is not to say there is no fat in the system that could be removed. But generally it is better to remove fat for the patient’s benefit – productivity – rather than leaving them emaciated.

Frequently, council staff say, after a person complains that applications are running slowly, the IT staff will tell them, “The servers are fine”, which doesn’t recognise the problem. Three frequently used key performance indicators (KPIs) used by councils are Server Uptime, System Availability and Helpdesk Calls closed. But arguably none of these really reflect either IT’s potentially transformational role or even a lesser one of delivering efficient working systems.

But if delivery business or staff efficiency without the bluster is IT’s role, how do you get IT to deliver on it? It’s easy enough to measure helpdesk calls, and server uptime. But arguably that is waste of everyone’s energy.

This idea of effective metrics reminded me of a recent experiment at Newcastle University where in a departmental coffee room, there was an honesty box, where you pay for your tea and coffee. Well, at least, that’s the theory, because no-one’s watching, right?

What researchers found was that putting up a picture of a pair of eyes watching – as opposed to, say, a picture of flowers – led to the money put in the box being trebled. In fact, in weeks with a picture of eyes above the price-list, staff paid 2.76 times as much for their drinks as in weeks with flowers. If only those eyes could similarly be targeted on IT’s efficiency, you might say.

So, what might be more effective KPIs to measure IT efficiency? Well perhaps staff surveys, around how the Helpdesk helped you become productive (which is different to the number of Helpdesk calls resolved). Another useful metric might be ‘system usability’ (though not server uptime. That metric is largely meaningless. Most servers are already running 99.99+% uptime.)

There is a case for asking what efficiency improvements a new system will bring and what problems it will solve. That is a different case than simply requesting a shiny new system. In today’s climate, no-one is going to sign off on one of those without good reason.

Making the IT-Finance relationship work

Asked what makes for a good CIO-FD relationship, Mike O’Donnell, interim executive director for financial sustainability in Newham, who also has a wealth of experience in large councils such as Camden Council and on secondment in Birmingham City Council says, “One of the things I always say in those CIO conversations is that I have to understand how the rubber hits the road. There is a risk on, for example, digital that the conversation stays up high and it all sounds terribly interesting and important. But actually, (it means) understanding what difference it makes both to the organisation – what’s going to be better in the organisation – and what’s going to be better for residents. So, actually understanding what the real deliverables are.

“A CIO who can put that across and ‘land’ that is really important, because they are talking to a finance director who is an accountant, a finance person and wants to understand what it looks like practically and then what the resourcing requirements are. So that’s a key thing from the CIO to the FD. There’s also something about learning upwards: recognising that their boss – often the FD – needs a bit of support and they’ve got a bit of a journey to go on in terms of learning and their senior colleagues have as well. It’s then about delivery really. It’s about delivering change in an effective way and from the FD point of view on budget as well.

“From the other end of the telescope. I think if I were a CIO, what would I like from a relationship from my finance director? It’s about ‘getting it’, and then having a medium term to long term plan and vision really. And backing that up with resources. There is an investment need for IT/digital. Quite often it’s been under invested in. So I think there’s recognising the need to invest and that’s based on recognising the potential benefits of ICT and digital investments.”

He continues, “Yes, it’s important to speak each other’s language at a level and that’s true of the whole organisation as well. A good finance director is somebody who can translate what can be some quite tekkie finance stuff into stuff that politicians, corporate management team colleagues can understand. And ditto the ICT/digital person, who needs to be able to put that across in a way that is comprehensible and understandable and can therefore win some agreement and sponsorship from senior officer colleagues and from politicians.

“Politicians are very interested in what digital can deliver for their residents, and in what it can do to help them out of what is a pretty sticky position of needing to make lots of savings. So, speaking the same language but also being prepared to enter onto the other person’s turf a bit. The ICT/digital person has to be able to understand at a level, the finances, and how that works and equally, the FD has to have some sort of understanding of what digital means, what the opportunity set is and what it takes to deliver some of the benefits.”

Graham Cadle, who as interim executive director of finance and resources at Basingstoke and Deane Council has responsibility for a number of the council’s corporate functions including IT, argues finance and technology need to work together and have to have a culture of working together.

An example is on digital programmes where the financial constraints affecting councils have, in a way been positive, forcing change. It means, he says, management has had to be courageous about doing things in a different way. But that necessary change will only take place if management pushes quite hard. IT, he argues, need to explain the art of the possible to all parts of the council, speaking both the business – and operations teams’ – language.

The way forward

There has been an IT-business disconnect which needs to be bridged and we will explore this disconnect in more detail through this ‘Managing Upwards’ series of articles. The pieces will consider topics such as the politics and reality of managing upwards: managing your boss; managing upwards in both local and central government; the Finance Director-IT relationship – how it currently works, and how it should work; a view from the FD; and how to make the relationship work.

It’s an oft-cited desire, but there is an urgent need for IT to start talking the language of business, and to some extent for ‘the business/finance’ to get itself up to speed on technology developments.

There is a phrase, “Words are the meaning that you give them”. So, it is important to debate what is important to the business in a language they understand and if needed get some outside help. There is a strong case for running a workshop for IT directors to explore these issues and Government Computing is planning to do that early in 2019.

From the IT side,  David Tidey, head of IT for the London Boroughs of Richmond and Wandsworth says in the current financial climate, which continues to look ‘pretty grim’, there isn’t money around, which means as an IT director, you have to fight for it.

“You have to have a business case. You have to deliver good, reliable IT. The Finance Director is worried about the day to day operational structure. So, you have to deliver collaborative IT. You have to be on top of your finances. You have to understand where the money is being spent. And you have to speak the right language and talk about ROI – the return on investment. Make it clear, transparent and tangible, with a clear report explaining both the savings and how our residents will customers will benefit.”

Naylor urges IT directors to think in terms of the customer as well as transformatively. In terms of local authority structure that IT should benefit from, he believes in having a customer and information management board. “Start with the customer experience. How is it for them? And that applies to internal customers as well as external customers. How many logons do you have to have as a manager to do your budget: your finance, your procurement requisitions, your HR system? If the answer is three different ones and that those systems don’t integrate with each other, then guys, that’s the problem. And I shouldn’t have to point it out to you. And don’t tell me the answer’s an ERP system. It’s not.

“So, if I’m looking at IT metrics, they fail if we fail. Right? If the customer experience is not getting better. If I’ve got 10% of my calls in the call centre that are failing. If people are not able to fulfil transactions on the Internet, it’s IT’s problem. And they can sit there and say, ‘Well, it’s the business.’ Between you, sort it out. IT needs to bring solutions to the wider problem, not exist in their own little bunker. And the finance community has an absolute responsibility to make that happen. The IT director basically needs to see themselves as a modernisation director. But ultimately, if they’re getting stuck, then think about the customer.”

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