September 22, 2017
Gerald Grant, Ph.D.
Oftentimes, chief financial officers (CFO) are viewed as adversaries to the ambitions of information technology (IT) groups in firms. CIOs and business leaders with major IT programs are concerned with the perceived underfunding of their programs which they think are vital to firm success. However, CFOs have become more skeptical of the vaunted claims made by technology evangelists about the potential for growth and profitability that such technologies offer their organizations. They have had front row seats for some horrifying technology-initiated disasters masquerading as the next big leap in organizational transformation. Consequently, they often resort to using blunt instruments such as cutting the IT budget a certain percentage to “rein in uncontrolled IT spending”.
CFOs have earned the right to be skeptical. When they are told that a project has come in on-time and on-budget and then see that the systems that they invested in end up as functional failures requiring greater investment to fix, they can be forgiven for being cynical and unbelieving. Any good project manager can make a project come in on-time and on-budget. To what cost though. Investments in IT that don’t deliver the value promised and that pretend to be successful are not worthy of investment. CFOs are looking for transparency and accountability in IT spending. They have sincere questions about the large and growing expense of IT and whether such spending is judicious. They want to be able to judge whether the investment makes both business and financial sense. Money put into technology is money not available for other pressing investments. IT and other business leaders need to show that they really understand how to manage the business and financial risks of undertaking large-scale technology projects that have indeterminate end states and benefits.
Instead of using blunt instruments to rein in IT spending then worrying if they have harmed the organization, CFOs need to focus their attention on interrogating technology projects. How does the investment being proposed fit with overall business objectives? How will it help the company advance and continue to be profitable? What will be the effects on business capability and sustainability? If they are to gain the trust of CFOs, CIOs and technology leaders need to develop ways to alert the CFO early when projects are going off the rails and when they should kill projects that are not ever going to succeed. Business leaders, on the other hand, need to take responsibility for the value they promised from the investments made. They cannot keep getting into the technology blame game that so often follows failed IT projects. Everyone is in this together. If there is a trust deficit, no amount of sophisticated project management can fix the problem.