IT value means many different things to many different leaders. For some, it’s about solving a big issue -- like remote work during a pandemic. For others, it’s about eliminating outdated technology or modernizing back-office systems and process.
But all CIOs need to have a well-rounded view of the business and industry landscape. This three-part series will be dedicated to the critical success factors for today’s CIO: financial acumen, business acumen, and technology acumen.
Financial Acumen
Our first post in this series starts by following the money: financial acumen. That’s important because IT value many times boils down to finance. Do most CIOs have that level of financial acumen? Probably not to the degree now needed. And that’s why it’s important to have at least one of three things:
- A great relationship with the CFO
- An “IT CFO” role dedicated to the IT organization
- A mindset of managing an IT business unit
Financial acumen Is crucial to be able to follow (all) the money, follow investments, identify low-hanging fruit that impacts revenue, and identify the big opportunities. Financial acumen doesn’t mean a CIO has to navigate like a CFO, but it does mean a CIO needs enough knowledge to effectively partner with the CFO for maximum impact to help drive success. It’s important to note that the CFO’s role is also changing, focusing more than ever on AI and data. This means that the CFO/CIO relationship is not only strategically critical but also incredibly symbiotic. CIOs and CFOs have a lot to gain from each other, so remember the importance of finding and understanding all the common ground that lies between these leadership roles.
Know Your Business, Know Your Numbers
Financial acumen and collaboration are key to understanding common top-line key performance indicators (KPIs). It’s important to remember that KPIs measure business results, not standalone project or technological progress. It’s important to follow the money from technology efforts to revenue changes, customer experience engagement, service product or service quality and reliability.
Post 2020, there is a shift in how companies realize and measure IT value, as well as how CIOs will measure success moving forward -- because it’s not about progress, it’s about results.
Three steps to measuring IT value (for results)
- Identify and quantify the outcome (revenue, customer or market growth, employee engagement, lead conversion, etc.). Pick one as primary and one as secondary.
- Identify and quantify the financial spend Impact (redirected spend; capital/depreciation/opex)
- Obtain results in less than six months
The financial and economic aspects of business can be a weak area for IT. For smaller companies and companies in transition that may not have a CIO or CTO, there is an opportunity to consider fractional CIO and fractional Office of the CIO/CTO services, which can bring deep experience to the function at a fraction of the cost. Fractional services can solve a lot of client headaches and budget woes. And we know it’s working when a client tells us “this has paid for itself four times over” in under six months, and “you’ve saved me an entire year of work” getting a handle on IT economics and understanding the spend.
Always follow the money.
If you want more information on fractional services, we can help!
Contact Elinor MacKinnon
Author:
Elinor MacKinnon 2021
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