Any advocate for better software quality knows that one of the biggest challenges is helping the CIO reach the CFO. When your team needs a budget for an important project, those conversations often break down. Thanks to the unavoidable technical complexity of IT, oftentimes the CIO might as well be speaking Esperanto to the CFO.
When it comes to budgeting, IT might be the least-understood department in your organization. And what the CFO doesn’t understand, he doesn’t budget for. Instead, capital that should rightfully go towards IT growth and innovation is allocated to other groups and initiatives. That dulls the organization’s competitive edge, and can have a toxic effect on system quality overall.
This is why I advocate software estimation as a budget-winning process for IT leaders. It clearly correlates software quality and technical debt in ways that a CFO or CEO can understand. “Technical debt” is a useful term that helps people outside of IT understand that application risk can be measured, and has a cost that gets paid for one way or the other.
The difficult part comes in where the rubber meets the road. Your CIO has intimate knowledge of the inner-workings of your IT department; you just need to equip him with the proper metrics to interface with the CFO.
Rather than getting technical, the CIO must decode what the IT teams do and translate it into the language of planning and budgeting -- with a focus on being responsive, adding new capabilities, and reducing maintenance costs and risk per head. This is one place where our technology can help -- with metrics like:
- Software maintenance effort over time. This metric tracks the estimated software maintenance effort of your most critical applications broken down over fiscal quarters. It gives you an immediately identifiable visual into which applications require the most upkeep, and which are actually becoming more efficient.
- Change in risk and size over the last four quarters. This report shows how many applications increased or reduced their risk to the organization; and also shows which applications increased or decreased in size. A great way to tell if your bloated applications are becoming a risk to your structural quality.
- Estimated vs. planned maintenance effort. This is another great metric which compares the planned maintenance per application against the estimated effort. The application size, number and type of technologies, complexity, and quality are all drivers of the estimated maintenance effort.
- Top 10 applications by high risk technical debt. This might be the most telling metric to bring to your CFO. This report shows the proportion of technical debt in your application portfolio that’s driven by dangerous coding patterns and should be addressed first to minimize business risk exposure.
With all the dimensional views an organization can get through our Application Intelligence Platform and Highlight reports, they can boil down high bandwidth conversations to a place where finance and IT can intersect. And armed with those key KPIs, your CIO will have rock solid metrics -- in the CFO’s language -- that can foster a dialogue both can understand.
Erik Oltmans, an Associate Partner from EY, Netherlands, spoke at the Software Intelligence Forum on how the consulting behemoth uses Software Intelligence in its Transaction Advisory services.
Erik describes the changing landscape of M & A. Besides the financial and commercial aspects, PE firms now equally value technical assessments, especially for targets with significant software assets. He goes on to detail how CAST Highlight makes these assessments possible with limited access to the targetâ€™s systems, customized quality metrics, and liability implications of open source components - all three that are critical for an M&A due diligence.