Accountability as a weapon for IT

The best jobs in IT are those at the intersection of technology and business. You can’t replace someone who understands the specifics of how both sides work and uses that knowledge to continuously improve cost effectiveness. Bill Miller, associate vice president of finance at Nationwide Mutual Insurance, enjoys just such a position, leveraging previous roles in both IT and finance for an organization with a nine-figure IT budget.

“We’ve been doing some form of chargeback model and IT costing for about 10 years,” says Miller. “I think as businesses mature, you begin to understand the relative importance of IT versus the product that you deliver, and you get more and more interested in understanding your IT costs and what drives them.”

[ For ongoing coverage of the business side of IT, read Tech’s Bottom Line, by InfoWorld’s Bill Snyder. ]

In an organization the size of Nationwide, getting the full cost picture has been a complex, evolutionary process. In the past, using a homegrown system, business units were getting charged back for infrastructure, but the data provided was not easily comprehended. “Business units were seeing the charges come through, but … they wanted to understand why they were getting that charge,” Miller recalls. “They could see they were getting charged for a server, but they didn’t know why or what that server was related to. There was no link between intelligence and the information they had in hand.”

Miller’s ongoing mission is to roll together technical IT services — server, storage, network, and mainframe services — into a business services catalog that business people can understand, without losing the underlying details that make those costs reflect reality. Cost management software from Digital Fuel has played a pivotal role in this effort.

But what about software licensing, app dev costs, and the like? “I’ve got the labor side of it historically separate, but I’m bundling that together, coming back and saying here’s an application or an application suite and here’s the cost … and you can decompose that cost of hardware, software, and people cost to deliver that service. That’s what we’re building out today.”

The increased transparency is already having a transformative effect. “If anything this has gotten everybody to say, ‘OK, wait a minute, let me understand what the impacts are of the decision I’m making,’ and that has been a huge benefit,” says Miller. “Across the board now you have much more intelligence about the impacts [of choosing] A, B, or C, whereas before I think it was guesswork. Instead of people asking why something costs so much, they’re asking how they can participate in managing the costs: ‘What decisions should I make differently? Educate me.’ Now we can have a really intelligent conversation.”

The ability to trace the effects of business decisions gives IT a new point of leverage. “I’m actually not sure the business likes the visibility,” laughs Miller. Now, if a business leader says, “‘I don’t know what the hell is going on over there — some IT guy is doing it,’ IT can say, ‘No, actually, you requested this new functionality. You thought it would really be a cool idea that would drive revenue, and it didn’t.’ They’re not real thrilled about that. It’s an accountability thing.”

Miller sees cost management as an area of “rapid maturity,” driven in part by the wake-up call of a down economy. “IT has been treated like a black box, and that happens, you make dumb decisions. Being intelligent and really understanding what you’re talking about — it matters so much.”