Getting a CFO to Say Yes to IT Projects

By Elizabeth Millard  |  Posted 2008-06-11

It’s a contradiction that’s tough to handle for many IT managers and CIOs: The budget is getting leaner, yet demand for more technology and services keeps increasing. Although new strategies and equipment can improve the situation, tech executives might find that when it comes to infusing their pet projects with budget resources, the CFO balks.

Most likely, getting a rejection isn’t just a result of limited funds, but also the outcome of poor communication and badly handled proposals, notes Greg Baker, CFO of technology provider Logicalis.

The firm has developed a request rating calculator for its site, so users can determine how much weight a certain aspect of a project will be given by a CFO. For example, if the initiative is a directive from the CEO, it will rank high in terms of getting funded. But if the project has no timeline in terms of completion and is therefore not seen as urgent, it will have less chance of being seen as necessary.

In general, a CIO or IT manager should be able to articulate what type of effect an initiative will have on the security of the company’s applications or operation, how much the initiative will increase productivity, whether customer service levels will improve, and what the impact could be on strategic, tactical or operational goals.

Over the past few years in particular, much discussion has centered around the issue of technology executives creating more alignment with other parts of the business, and most importantly, being able to describe projects and outcomes in “normal” language rather than tech-heavy jargon.

When it comes to getting CFO approval, this is especially important, since eyes tend to glaze over when complicated technical details are introduced. In other words, CFOs don’t want to know how a new network switch operates or whether an appliance is well-suited for upcoming standards that are being put in place. They want to hear how it will save money, make customers happy and not add to IT headcount.

In today’s economic climate, most projects that get approved won’t be large, new projects, but rather smaller tweaks that can improve efficiency, says John Blyzinksyj, senior vice president at Patni Americas, provider of IT services, product engineering and infrastructure management.

“A major issue for CFOs used to be SOX [Sarbanes-Oxley] compliance,” he says. “But, although that’s still a concern, right now they’re more focused on conserving cash, reducing inventory and looking at any IT project that helps improve the efficiency of the supply chain.”

CIOs and IT managers who are seeking additional budget monies should also keep in mind that most budgets are not expanding, so any funding would have to be taken from other departments. If that’s the case, Blyzinksyj notes, the technology executive had better be able to justify precisely why the initiative is needed, and what the outcomes will be.

CFO Input, Long Before the Proposal

In addition to being able to speak clearly about an initiative’s benefits, there should also be a complete lack of surprise, says Logicalis’ Baker: “If a capital expenditure hits my desk, it shouldn’t be the first I’ve heard about it. Too often at companies, there isn’t enough informal dialogue about what issues are coming up in the near future. And that’s why good opportunities get missed.”

Baker suggests that CFOs and technology executives meet at least once each quarter to chat about specific concerns, such as a potential lack of data storage space, or higher-than-expected labor costs with IT employees. Involving the CFO early and often can help to shape initiative proposals, and get them approved.

The areas in which IT and CFOs can work together most effectively are security, regulatory compliance, business continuity, storage management and service management, according to Patrick Zelten, vice president of professional services at Forsythe Solutions Group, a technology consulting firm.

“Understanding business needs surrounding an area like storage management can have dramatic effects,” he says. “The two groups can work together to set priorities and get the maximum value out of the IT spend.”

Another important aspect is an abundance of detail, which doesn’t mean technical information, but rather, an explanation of how the project will proceed through numerous phases. “One of my pet peeves is seeing a capital request that completely lacks justification for the numbers, with no clearly painted financial benefits,” notes Baker.

Details about disk features or software upgrade advantages also leave him cold, he adds. Like other CFOs, he’d rather see case studies of other companies that have spent the money and benefited from the results, or a survey of customers about what type of technology-fueled changes they’d like to see.

Another advantage in a proposal is an articulation of outcomes at various stages of a project, not just as the ultimate goal. “A fatal flaw can be trying to wrap too much into one large outcome,” Baker says. “Instead, there have to be milestones and measurable phases.”

Pressing for a fast decision and putting a sense of urgency into the project is also a sure way to get the CFO veto, Baker says. He finds fast-track requests to be suspicious, particularly if he hasn’t heard about the project in the past.

Finally, a large part of informal and formal discussions should center around general expectations, with a healthy amount of realistic goal-setting, Zelten adds. This includes thoughts on how a project might fit in with others already in progress, or with goals in other departments, such as sales and distribution.

“There’s much that can be done [to help] a CFO to understand technology’s role and for IT to understand the business,” he says. “You can’t talk enough about risk, cost and outcomes on both sides.”