Staying On Top of the Bottom Line
LEAD IT asked Grahek to shed some light on what makes his particular approach so effective – and how it helps FICO realize greater returns from its investments in IT.
Tom Grahek is very dedicated to the business side of successful IT management. So much, in fact, he gave up cable TV for two years recently during the time he was earning his MBA – all in an effort to better manage his time while learning to manage the business end of IT systems at FICO. It’s a skill set he refers to as “financial engineering,” a valuable tool in today’s competitive business environment.
LEAD IT: How do you launch or begin developing IT strategies that meet key business objectives? Is there a formula you incorporate despite the size of the initiative?
GRAHEK: Part of my professional development includes performing external surveillance on the IT industry every month. I look for trends and upcoming technologies that will help businesses drive productivity and energize revenue. At the same time, I am continually performing internal surveillance on my business to understand key business objectives that may be accelerated with technology. I then look to marry technology to business requirements.
The genesis of any IT initiative should begin with a financial analysis. Every IT professional should have a working understanding of his or her company’s financial model. IT executives need to take this one step further and be masters at financial engineering. Having a strong financial AND technology skill set is a deadly combination that contributes great value back to the business.
Technology is becoming more complex to implement. At the same time, the benefit of technology to the business is at an all-time high. Translating the complexities of technology into simple business terms requires robust communication skills. New consumer technologies, like the iPad, create a veneer of simple “instant on” capabilities that almost anyone can master. Building enterprise architecture is very different, but the perception of simplicity should remain the same. Building enterprise solutions that are easy to use requires a mastery of skill sets ranging from technical to staff management.
The credibility of an IT executive rides on the success of each project. Setting appropriate expectations around cost and time to deliver should be considered a survival skill. Every project must be delivered on time and budget. Leading by example, leaders should adhere to a high standard and extend this expectation to employees and partners. After establishing a track record of successful initiatives, my business will know that they can count on me to drive increasingly larger investments.
LEAD IT: What are some financial measures you have used in the past?
GRAHEK: I view each IT initiative as an investment that will deliver a positive return to the business in terms of hard dollars. Although many investments also provide a soft dollar benefit, most CFOs rely on a cash flow analysis to make decisions. I limit soft dollar savings, like productivity improvements, to a footnote on my analysis.Net Present Value (NPV) is a financial measure I use on capital projects. The initial purchase of technology (i.e., servers and software) represents a day zero investment that will generate revenue (savings) over a period of time. For example, if I invest $500,000 to execute a virtualization initiative, I will achieve a $1,056,000 savings from the reduction of maintenance, data center expansion, power/cooling, and staff over three years. The initial investment will have an NPV of $296,232. When performing a financial analysis, make sure to work with your internal finance department to set the discount rate and period of return (number of years). The cash flow analysis for IT projects should be in the same format as for any other business investment (i.e., acquisition).
LEAD IT: Increasingly there’s a blurring of the lines that were once drawn in IT departments, and now with desktop virtualization they’re all coming together. What does a good IT leader do to drive collaboration and the blurring between these lines?
GRAHEK: Good leaders begin transforming their organization to take advantage of upcoming technology shifts. With the move toward converged infrastructure, I held a series of internal meetings to prepare my staff for a successful transition. In these meetings, I talked about technology trends and the impact they will have on IT staffing models. Converged infrastructure will blur the lines between the traditional organizational silos. IT professionals will need to move from a technical-centric to a service-centric perspective. The leadership challenge is to frame change in the form of an opportunity. This will help IT professionals embrace the new paradigm of IT as a career opportunity instead of a threat. The new wave of technology reminds me of a similar time several years ago when server virtualization started to become accepted as an enterprise solution. During that time I was networking with several peer organizations to understand the success rate of deploying virtualization. Early on, the results seemed to be mixed. Some organizations had great success, while others struggled with failed implementations. The successful organizations focused on building a strong vision supported by a core set of skills to execute upon. For example, IT organizations may always require a small subset of subject matter experts in each infrastructure discipline (server, network storage). However, I expect the ratios to move dramatically toward a larger number of “Solution Engineers” who bring a broad range of technical skills to bear against business objectives. IT professionals who embrace the promise of converged infrastructure and cloud computing will find themselves with compelling career opportunities in the near future. Leaders should take action now to position their staff for success. Encourage your staff to broaden their technical skill set and develop a strong business perspective.
TOM GRAHEK AT A GLANCE
- Family: Married to Ingrid; three children ( 3, 6, and 8 )
- Passion: Outdoors; Northern Minnesota; Minnesota Vikings
- “We spend many summer weekends at our cabin in Northern Minnesota hiking and swimming. In the winter we enjoy downhill skiing, with an annual trip to beautiful Steamboat, Colorado.”
- Currently the Vice President of IT at FICO, responsible for the technical infrastructure that supports clients in 80 countries. Previously held positions at Merrill Corporation and Honeywell.
- Location: Minneapolis, MN