CIOs are expected to work magic at cut-rate prices.
Our expert panelists share their top tricks for managing the finances of IT.
With mounting pressure from the business to cut budget and reduce IT spend, CIOs are expected to work magic in their departments by producing innovative solutions at cut-rate prices. What if you could turn a $1M budget into a $4M budget? No, it’s not a get-rich-quick scheme or anything even remotely illegal. It’s understanding the finances of IT.
Our C-level experts Jeff Loeb of Edina Realty, Ed Clark of University of St. Thomas, and Steve Jensen of SunStream Services share their perspective on financing and managing IT projects, engaging with the business, and how they handle shadow IT.
Adding Value as a CIO
- IT executives need to have a firm grasp of the P&L. Look at your IT budget the same way the business does – scrub out anything unnecessary and you can likely fund your own projects or even create an innovation budget.
- CEOs and Boards of Directors are ultimately looking for one of two things: to increase revenue or save costs. Always tie your initiatives to one of those two goals.
- When people don’t understand the value of something, they often say it’s too expensive. Relate everything you pitch back to the business goals and make clear how it adds value.
Managing IT Projects
- There are three kinds of projects – Fear, Fact, and Faith. Fear projects are done to mitigate some kind of risk. Fact projects expect a very specific and certain return. Faith projects have a level of uncertainty, but provide a new capability to succeed.
- Turn every “IT project” into a “business project.” Find the business advantage and spin your projects in a positive light. For example, instead of saying, “these switches are old and need to be updated,” you could say, "Updating to newer switches will lead to greater productivity by driving employees to the office."
The Implications of Shadow IT
- Information technology systems, software, and applications managed outside of the IT department without their knowledge are considered “Shadow IT” – recent studies suggest more than 50% of technology spend within organizations is “in the shadows.”
- Depending upon the type of organization you find yourself in, Shadow IT might be acceptable (or even encouraged as an entrepreneurial spirit) or fully frowned upon. The main risk? Using up scarce budgetary resources and developing high costs to switch products.
Closing Thoughts
CIOs have a unique responsibility to lead technology strategies while navigating business goals. By taking the time to frame every initiative from a business perspective, there is a greater likelihood of receiving funding and corporate support.
Extra Credit
CIOs reveal their most essential IT financial management principals. Global IT leaders from PayPal, Farmers Insurance, and others share their critical elements to a sound IT finance strategy.
IT Pros Believe Shadow IT Could Become a Competitive Advantage, Study Shows. A survey by Entrust Datacard revealed five key findings as it relates to the upside of shadow IT.
When Employees Are Using Software That IT Hasn’t Approved. HBR recommends following two rules of thumb to help CIOs get in a better position to anticipate and manage shadow IT projects.
