It’s not easy being a CIO these days. Not only are you expected to keep the technology infrastructure purring along smoothly (e.g. “let’s all just work from home!”) and safely (e.g. “we can’t afford to be hacked!”) in the face of unrelenting external pressures, but you must also be an active participant in satisfying the digital-transformation needs of the business.
It’s two very different jobs, that require different kinds of resources, organizational structures, and management approaches. In the first job, it’s like running a utility company, while in the second, it’s closer to being in a high-tech startup!
Understanding the existence of this dichotomy is the first step towards doing a better job of managing it. While technology infrastructure will always need care and feeding, the role of the IT function (IT) in supporting business operations and initiatives is becoming increasingly important. In order for IT to be a true strategic business partner, it is essential that IT leaders understand the basics of IT Financial Management (ITFM). This includes tracking, forecasting, and planning IT costs relative to the support of business operations. Without this critical capability, IT will not be able to make informed decisions about where to allocate resources in a way that best supports the company's goals and objectives.
Sell IT's Value to the Organization
ITFM is essential to IT's ability to demonstrate the value of IT investments and provide a clear picture of IT's contribution to business outcomes. IT leaders need to be able to show the value of IT in financial terms, and ITFM is a key component of this process.
In addition to tracking expenses and reporting on initiative-specific ROIs, effective ITFM also enables users to forecast the cost of meeting future needs of the business. IT leaders should work with business stakeholders to develop a shared understanding of upcoming IT initiatives and how they will support the business. This allows IT to procure resources and develop capabilities in a cost- and time-effective manner.
Support Operations with Insights
Successful ITFM begins with access to financial data which informs decisions about how resources should be used. For example, IT often needs to allocate its costs back to business initiatives using a business metric for proportional calculations. This kind of modeling increases transparency about the true cost of various activities.
Without access to the full financial picture, IT can only guess as to where it should allocate resources and may not end up providing sufficient support in areas that add the most business value.
Thrive in an Outcome-Focused World
In order to be successful in today's business world, IT must shift its focus from being technology-driven to outcome-driven. This means that IT needs to understand the business goals and objectives and work towards achieving them. Too often IT is seen as a cost center rather than a value creator, but by becoming a strategic business partner, IT can reposition itself within the organization.
Having an ITFM system and process in place is essential for IT leadership to demonstrate the value of IT investments as well as provide a clear picture of IT's contribution to business outcomes.
To explore how your organization can enhance its ITFM initiatives, contact QueBIT today. We would be happy to discuss your specific needs and explore how your existing planning software platform may help you get the most out of your IT capabilities.