Roadblock: The CFOBy Mel Duvall | Posted 2003-01-01 Email Print
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Investments in new technology don't always pay off, and that means, these days, the hardest person to convince of the validity of taking on a new project is the chief financial officer.
Investments in new technology don't always pay off, and that means, these days, the hardest person to convince of the validity of taking on a new project is the chief financial officer. Even when a project is on track, financial pressures within a company can result in an initiative being shelved. This was the situation faced by technology executives at Herman Miller, who had to decide which projects to kill and which to keep, as industry conditions worsened. Here are some guidelines on what to do when the bean counters come calling.
Prepare return-on-investment metrics.
When word comes that budget cuts have to be made, prevent rash decisionsor making cuts just because they're easyby having a firm understanding of technology costs and the return on investment. It provides the footing needed to stand up to the CFO to protect initiatives that are key to the company's future. "You have to have a good handle on what the costs are and why those costs exist," says Sunil Subbakrisha, president of consulting firm Information Economics and a former CIO for several financial institutions. "If you haven't gone through that process, you need to do it now." By comparing the technology costs invested in a particular business unit versus the revenue being generated, it also may provide an argument for charging certain costs back to the business units.
Salvage successes through results.
When the CFO came knocking at furniture maker KI Inc. earlier this year, the Internet development group was able to salvage an Internet shopping portal from a larger e-commerce project. Dana Vanden Heuvel, manager of KI's Internet operations, says the portal initiative was salvaged because it was succeeding and he could prove it. "We measure everything," he says. "We can show exactly how many sales leads come in over the Web, and the resulting sales. It's a lot easier to deal with the CFO when you have the data to back your decisions."
Always look for savings.
If nothing else, start a review of software licenses and other technology assets involved in your important systems, to find duplication and to stop maintenance on assets that are going unused. Another sensible measure, says Bill Rosser, a Gartner vice president and research director, is to review applications in development to determine which projects are consuming resources disproportionate to their expected payoff.
Get to know the CFO.
Sometimes the CIO has to stand up and hold firm against shelving vital projects. When that time comes, make sure a friend is in your corner. Subbakrisha says it's OK to push back if you've got a highly placed business sponsor on your side, and the facts to back up your case. "If you don't have that, you're on shaky ground. You could be damaging your credibility in the company," he warns.