• United States



by Margaret Tanaszi

Common Cause: The CIO, the CFO and IT Value

Mar 30, 20055 mins
CSO and CISOData and Information Security

Two high-profile players in the IT-business relationship have special prominence in ensuring IT’s contribution to the organization: the CIO and the CFO. These days, the CIO and CFO need to work in tandem as joint overseers of next-generation business architecture, and to collaborate in addressing evolving organizational needs. Both have a vested interest in driving efficiencies and delivering effective results for the business. For both, that involves optimizing the value of IT services.

The Challenge: Getting the Most from IT

Organizations face three primary challenges in optimizing IT value in the enterprise:

  • Effectively managing IT costs
  • Ensuring high-quality IT operational performance
  • Generating high-quality IT-related business performance

In addition to managing costs, organization leaders have to care about how IT serves business and how business makes use of IT to advance organizational objectives. They must continually gauge the cost effectiveness and business effectiveness of IT operations and new investments by finding answers to two key questions:

  • How and to what extent do IT capabilities make business results possible and outcomes better? IT professionals are on the hook for demonstrating the answer.
  • How and to what extent do business processes and practices help or hinder IT’s contribution to delivering business results? The way IT is used by business constituents, and in what process environment, greatly affect the benefits that organizations can derive from IT.

    The Big Question: IT’s Business Effectiveness

    As IT’s importance to business and complexity continue to increase, its impacts on business operations and outcomes become even more business-critical. IT costs, also substantial, correspondingly generate more profound effects on business financials.

    Similarly, IT services are having a greater bearing on both tangible and intangible success factors for the business. Accordingly, IT and finance functions are moving towards a common critical target: IT-related business performance.

    These tendencies are reflected in business expectations of CIOs to think and act in a more business-oriented way, and of CFOs to do so in a more technology-focused way, as organizations become more dependent on IT resources.

    In other words, CIOs need to understand how IT makes a difference to their company colleagues so they can optimize the cost and business effectiveness of IT services, and CFOs need to take an active interest in the management of and accountability for IT resources as part of enterprise value management. Each requires visibility into the other’s domain, and a common understanding of the business implications of IT services.

    Driving IT Value From Both Sides

    Organizations that want to capitalize on the evolving connections between IT and business should support and promote a closer working relationship between the CIO and CFO – their value stars.

    Finance and IT leaders should be working together to improve the way IT performance supports business performance, to enlarge the value of their own work, and to benefit the business. When they actively support each other’s perspective and work from their own areas of expertise and authority to facilitate the other’s activities regarding business value from IT services, the organization wins. We believe they can do so with complementary specific actions to increase value from IT operational performance and IT-related business performance.

    IT Operational Performance

    IT operational performance now has greater impact than ever on a wide range of important business components that make the enterprise successful, including: the effectiveness of the company’s operational model; its customer interactions and consequent store of customer loyalty; and its reputation and market valuation.

    We believe CIOs and CFOs can contribute most to this objective in three key categories, as shown in Figure 1:

    insert fig 1 >

    CIO-CFO Complementary Actions to Boost IT Operations Value

    IT-related Business Performance

    IT in the organization must be seen and managed in terms of its business usefulness. It is here that business and IT meet: in outcomes. CIOs and CFOs can make the implications of particular uses of IT and business resources visible to all parts of the organization. That, in turn, can drive better decision-making and practices to improve IT-related business performance.

    For CIOs, such actions can increase IT’s credibility, strategic importance, and value to the organization. CFOs can raise the profile of the finance function by actively managing the enterprise’s business value with special attention to IT services. We believe CIOs and CFOs can make significant contributions to closing the business/IT gap through actions in three key categories, as shown in Figure 2:

    CIO-CFO Complementary Roles in Optimizing IT-Related Business Performance

    Looking Ahead

    IT’s value is manifested in the way IT capabilities and services enable the organization to conduct its business efficiently, effectively, competitively, and successfully. Its importance to business is demonstrated in the converging perspectives of CIOs and CFOs.

    CIOs have been paying more attention to how the organization’s technology resources are contributing to business success. CFOs have taken on larger roles in the value management of IT resources.

    The CIO and CFO have key roles in ensuring that IT’s contribution to the organization balances out on the positive side of the competitive and financial ledger.

    The quality of the two executives’ relationship holds the promise of better, complementary IT- related business outcomes.