CFOs and CIOs too often act as though they are partners in an enormously uncomfortable marriage.
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During the free-spending days of the technology boom, CIOs often had their way with technology investments. But in this time of economic slowdown, control of budgets and big-project spending in particular are back in the office of the CFO, and they have a tight grip on the reins when it comes to IT expenditure.
The problem is that most CFOs view IT purchases as making a hefty dent in the expense column and not much of an impact on corporate earnings. Few technology chiefs are able to justify and demonstrate the value and return of their IT expenditures, and many are not skilled enough to align their IT strategy with their company's financial agenda.
So how do CIOs get better at this? How do they close the gap and ensure that CFOs understand the impact of IT spending on the business?
Three core competencies should do the trick:
- Speak the financial lingo. The CIO must understand and deliver financial metrics and define technological initiatives in terms the CFO understands, i.e speeding products to market, enabling growth and reading costs and risks. If CIOs adopted that kind of approach, CFOs might be inspired to take them more seriously as partners in developing the company's strategic direction.
- Qualify and quantify your IT spending. It's all about generating business value, not about implementing the latest technology. Value, quite simply, comes from doing things for clients that they're willing to pay for. For example, if you're thinking of implementing a business process automation system, your first question should be, "will it improve customer service?"
Also, consider how you are going to quantify the strategic and financial impact of your IT projects in dollars or other metrics, thereby helping to bridge the gap between the finance and IT departments.
- IT positioning. This encompasses the way CIOs convey the importance of technology to the CFO and the rest of the management team. Start by learning the concept of shareholder value. Ask yourself, "How can IT position itself as a contributor to shareholder value?" Then communicate that value to your company's executives in financial terms.
Positioning also includes how persuasively and intelligently CIOs express the technology agenda to the press, industry executives, investors and employees in light of the company's business, sales and marketing plans.
Chuck Tatham is vice president of marketing and Business Development at Changepoint Corp., a Richmond Hill, Ontario-based company that helps IT departments align with business objectives.