How CFOs Can Help Align IT to the Business

CFOs are ideally placed to create a tight and lasting connection between business needs and IT efforts.

In most large organizations, IT is still viewed only as a support function, with business executives playing little role in its strategic or operational direction.

As a result, most business managers end their involvement in development efforts after the requirements and user validation stages. This creates a chasm between their understanding of technology risks and priorities – and reality. It also prevents the business from understanding and leveraging the impact a well executed IT strategy can have on core operations.

Much of the busines's “wish list” involves IT that affects here-and-now revenue concerns, leaving little bandwidth and resources to improvement operational systems. These systems are often relegated to legacy infrastructure that badly needs fundamental overhaul but typically receives only piecemeal changes. This means IT initiatives that could transform the business, long-term, are forsaken to ensure that near-term business requirements are addressed.

Too few senior executives coach and mentor their staffs on how to drive value from their technology initiatives. In fact, relatively few executives actively guide and sponsor initiatives. Since IT programs typically require difficult organizational change, these lacks of executive support means business managers can overtly, or covertly, sidetrack strategic projects to meet their own needs.

What CFOs Can Do

Because IT often reports to the CFO, he or she is often in the best position to better align IT with the business and give IT the visibility it deserves.Here's how:

• The CFO can guide the IT organization through the same detailed planning and definition of objectives required of business units. This process should specifically look at creating greater business alignment and defining IT objectives and goals as a function of individual business goals.
• Because he signs off on IT's budget, the CFO can require IT to balance short-term goals with long-term organizational strategy. This would replace the decentralized decision-making that allows divisional CIOs and business heads to meet their immediate needs at the expense of longer-term enterprise-wide requirements.
• The CFO can also apply KPIs that assess the business impact of IT at the program level, rather than at the line of business level. This more precisely measures the benefits of IT spending, and makes it easier to prioritize future investments.
• The CFO can apply the same rigor to IT spending forecasts as applied to the business. Understanding future spending requirements as well as business needs helps to balance operational and strategic IT needs. Extending risk management usually applied to external business factors to internal IT operations can also lead to more effective governance.
• With their experience understanding the future impact of investments, CFOs are well-best positioned to make the case for “transformational” IT projects that can pay for themselves and even produce profits in the future. They can also insist the IT architecture that models the organization's technical capabilities is aligned with the business architecture. This helps assure the effective calculation of return on IT investments and increases the accountability of how large IT programs are managed and delivered.
• CFOs can help create funding mechanisms for high-return areas but often-overlooked areas such as business intelligence and data analytics.

A Framework for CFO Oversight

We suggest CFOs who want to better align IT with the business focus first on strategy at the business unit level and that of individual business functions. The CFO can then deconstruct the IT strategy to ensure proper short-term oversight, while keeping the overarching vision in mind.

They should then break down the business unit level strategy into various programs and projects to form the annual IT implementation roadmap. Finally, they should subject each program to a comprehensive benefits analysis, based on pre-defined metrics to provide greater accountability and to clarify the value delivered.

IT: Strategic Differentiator

If they view IT as a strategic differentiator for their organizations, CFOs will naturally calculate the return on IT investment in the same structured manner required for all large initiatives. The CFO's involvement is key to driving this behavioral change, which helps IT not just support, but to transform the business to meet changing market needs.

For more information, read the white paper The case for CFO Involvement in IT Governance and Investment Decisions (PDF) and about our Business Consulting services.