When CIOs bring in their own CFOs

According to a Gartner survey of 1,400 CIOs worldwide, IT chiefs’ No. 1 business priority this year was business process improvement — implementing technology to help their companies become more streamlined and easier to do business with. To help accomplish these elusive priorities, IT organizations are hiring business/financial experts as key members of the IT executive team. The idea is that these experts will be a catalyst for change, bringing a singular focus on business process alignment and value management within the IT organization.

These experts are variously called IT CFOs, IT finance controllers, IT investment/finance managers or IT value management officers. Many C-level executives think these business-savvy managers hold the key to achieving the elusive silver bullet for improving return on investment from IT. But unlike most IT managers and executives, these financial experts haven’t worked their way up the IT organization with their technical and project management skills, and therein lies a source of potential conflict.

These new business re-engineering champions within IT are often experienced CFOs, financial analysts, controllers or accountants, and almost always hold MBA degrees. Most enjoy early wins around the creation of rudimentary infrastructure for value management — most often developing homegrown spreadsheets to provide a standard template for investment assessment. However, very few receive the support and resources necessary to implement bona fide IT portfolio management scorecards that can be used to track project success, project risks, spending and contribution of the projects to business goals — proving IT alignment.

The most common problem is that these initiatives often face resistance from technical managers, most of whom do not have MBAs or financial analysis backgrounds and do not always understand the benefits of a successful business case or what is needed to create one. Secondly, the collection of company-specific data is a challenge, particularly when a fundamental understanding of the business and key performance indicators is required or when greater complexity such as discounted cash flow analysis and business process improvement metrics are involved.

The fundamental change management issues faced by many companies we have analyzed suggest that most technical staffers are extremely resistant to the financial due diligence process, whether that be business case analysis, scorecards or portfolio management. Without strong executive sponsorship and mandated adoption, the technical staff tends to perpetuate avoidance of disciplined investment analysis that has been the norm for decades of IT spending growth, usually coming up with reasons to not comply with IT investment analysis procedures nor contributing to the changes necessary to make the process effective.

Even in cases where technical staff is supportive of IT investment analysis, it is often difficult for business unit managers to collaborate and reach consensus and mutual buy-in on opportunity analysis, project costs and risks, and ultimate benefit projections.

Based on decades of prior conditioning, technical staffers are most comfortable playing the role of technology subject matter expert, focusing on technical features and functions rather than business value. Hiring financially savvy people will not yield instant results without apply education and change management to existing technology staff.

Although the achievement of success does not occur overnight, a few key actions can be used to ensure that these new IT financial managers are successful:

  1. Start with simple, easy-to-use tools and selective projects (to achieve early demonstration of the value of IT investment analysis) rather than attempting to boil the ocean multimillion-dollar portfolio management projects.

  2. Prepopulate analyses with as much standardized internal data as possible.

  3. Use industry-standard, third-party metrics at first to ease data collection.

  4. Implement financial and tools training.

  5. Communicate and reaffirm executive sponsorship regularly.

  6. Celebrate success around "better decisions" and "improved contribution to business goals."

  7. Require business case analysis for all projects above a certain investment value.

  8. Provide assistance and support throughout the analysis and assessment process.

The bottom line

The new breed of IT professionals who have experience in the financial management of IT is here to stay, and this new career path promises to be a good one, though it will take time to catch on — not with management, who are quickly reorganizing to add these valuable resources, but with the rest of the IT team members.

One of the biggest issues the new IT finance managers face is that they are very different from the rest of the IT team. As such, they will initially face resistance to their improvement initiatives.

To ensure success, these IT finance managers must have unwavering management backing and clear policies that support their mission. By keeping things simple and focusing on an ongoing process of incremental improvement, they are much more likely to create sustainable change within today’s context of full plates for most technical staffers.

Providing technical staff with 101-level IT investment training, celebrating and communicating success, and offering frequent assistance to technical staff who explore the financial side of IT will eventually make traditional technical staff as savvy at managing the value of IT as they are technically proficient.

Tom Pisello is the CEO and founder of Alinean Inc. and is a former managing vice president at Gartner Inc. He has been dedicated to using business-value measurements to prove and improve the return on IT for the past 16 years. Free ROI tools to help drive better IT decisions can be found at www.alinean.com/ITexecs.asp. Tom Pisello can be reached at tpisello@alinean.com.

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Copyright © 2006 IDG Communications, Inc.

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