C-Level Panel Discusses Effective Ways to Talk Budget with Business Side

Panelists dig into what works—and what doesn't—when it comes to conversations about technology budgets.


C-level executives on the technology and business sides discuss the best ways to have effective conversations about budgets while at the North American Buy-Side Technology Summit 2016.

There are plenty of necessary traits required of someone tasked with running the technology at a financial firm, but possibly the most vital characteristic of an executive is his or her ability to communicate with those on the business side when it comes to budgets.

It's an issue that has increased significantly over the last five to seven years due to a sequence of events, according to Apurva Mehta, CTO and head of architecture at UBS Wealth Management Americas.

Changed Consumer

Mehta, while speaking at the North American Buy-Side Technology Summit 2016, said Apple has ruined people's perceptions of what a true consumer experience is.

"They gave the consumer the idea that everything is easy. Everything is simple. Everything is trivial. It can be implemented on a yearly basis. You get an upgrade every year, and it's fantastic. Of course, Apple has $200 billion; it's a different story," Mehta said. "The CFOs are expecting an Apple-like experience because they are being spoiled at home with these iPads and iPhones. They come to work and expect the same level from their IT partners. And I'm not saying no. They should. But we don't have the budget to do it."

If the chief information officer said, ‘Well, this budget thing, you just figure that out yourself because I'm not a finance guy. I can only do technology,' we would be laughed out of the room, Bill Murphy, Blackstone.

The reason for tight budgets, Mehta pointed out, is two-fold. The regulatory climate has forced half of firms' technology change budgets to be used on regulatory requirements. There is also a massive amount of legacy technology, or technical debt, that is untouchable due to the people who implemented it having moved on to other firms.

Mehta urged firms to create a mandatory change-the-firm budget in addition to the traditional run-the-firm budget and change-the-firm budget. Too often, he says, changing out legacy systems falls between the cracks of the two typical budgets.

"There is always the question: Why is the storage upgrade considered run-the-bank? Isn't that something new you're implementing? Or the change-the-bank: What features am I getting because that's why it's called change-the-bank?" Mehta said. "This is housekeeping, and you are going to spend this money and then it's got to be a flat line. A certain percentage of the budget is dedicated to fixing technical debt. Without having that concept in place, the overall budget is never going to make sense."

Bill Murphy, CTO at Blackstone Group, echoed Mehta's point about people expecting the Apple experience. He said the lack of interest shown by folks on the business side when it comes to technology problems is frustrating and a double standard.

"If the CIO said, ‘Well, this budget thing, you just figure that out yourself because I'm not a finance guy. I can only do technology,' we would be laughed out of the room," Murphy said. "Whereas everybody else gets the chance to just throw up their hands and say technology is too complicated."

Legacy Issue

Fortunately for Mehta and Murphy, Kevin Mahn, president and chief investment officer at Hennion and Walsh Asset Management, was also on the panel. Murphy, the moderator, asked Mahn how heads of technology can effectively communicate with those on the business side about the need for replacing legacy systems.

Mahn said he looks for his technology heads to explain to him the issue and help him understand and appreciate what the implementation would do.

"Is this something our clients are asking for? Is this something our competition is doing already? And then if the answer to both of those is yes our clients want it and yes our competition is doing it, or if it gives us a competitive advantage, what are the alternatives in terms of implementing? What's the timeline? What are the tradeoffs between everything else we want to accomplish this year?" Mahn said.

Murphy asked Mahn what he thought of the concept of it being impossible to be precise with facts. Murphy's point was that what Mahn was essentially asking to do was predict the future. In his experience, engineers, like accountants, tend to be very hesitant to estimate because they can't tell for sure.

Mahn said there needs to be some level of conviction in the presentation. "I'm going to need some realistic expectations based upon your expertise in terms of the likely impact that you foresee for me to feel comfortable allocating budget to that," Mahn said. "I'm a portfolio manager. We make expectations and predictions in terms of returns for our strategies and our asset classes. They don't always hold true. Hopefully we're more accurate than weather forecasters. But the same could be said for a technologist. We just want your expectations and your predictions in terms of what you think the likely impact of us doing this or not doing this will be."

Bottom Line

A separate budget strictly for changing out legacy systems should be established. Technologists also need to show a certain level of conviction when making presentations to the business side about additional funding for projects.

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