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The Shape of Things to Come

Second time's the charm? Fortune's wheel may have brought IT back under finance, but let's hope that this time companies respond more effectively to what can be a valuable opportunity.
Scott Leibs, CFO IT
September 15, 2004

We're going around in circles." "The vultures are beginning to circle." "Ladies and gentlemen, we'll be circling LaGuardia for another 45 minutes."

Circularity, so often synonymous with futility (or worse — didn't Dante propose an architecture for hell based on circles?), can represent progress. Today, as companies restructure reporting relationships between the CFO and CIO, executives should bear in mind that to have come "full circle" is not necessarily to have traveled in vain. With IT once again reporting to finance at many companies, there's a very real danger that executives in both camps may allow that whiff of circularity to blind them to what is in fact a very valuable second chance.

Years ago, the expense of information technology and the fact that much of it was deployed in the service of accounting and other financial processes made the CFO the logical overlord. Over time, the broader potential for IT to drive "strategic advantage" and "business transformation" prompted many companies to view IT as a separate and almost magical entity, a view further bolstered by the eruption of E-business. As a result, CIOs found themselves presiding over burgeoning staffs and budgets, and often reporting directly to CEOs.

Even if an economic slowdown hadn't forced a rethink, some sort of reconsolidation was inevitable. Spending had run amok, the very success of E-business made it clear that it must be integrated into a company's primary IT systems, and IT investments came to be based less in terms of technological flash than on the same risk/reward criteria that shaped other capital outlays.

True, the aura of glory that once surrounded technological potential has, to a large degree, given way to pragmatism. But that shouldn't lead to skepticism, nor should any attendant feelings of disillusionment be allowed to take hold. CIOs should take to heart the endless advice now being offered by pundits and consulting firms as to how to work with finance. And finance should reciprocate, and beware of any hint of imperiousness — or laziness.

The renewed emphasis on ROI is important, but CFOs should do far more than simply approve or reject IT projects and expenditures based on various metrics. The past two decades have made it clear that IT is complex at not only the bits and bytes level but also the planning and investment level. Much of the wasteful spending of the past few years can be chalked up to a failure to not only run the right sorts of numbers but also foster meaningful collaboration between those who set strategy and those who implement the systems and processes that drive that strategy.

The impulse to think of IT as something separate isn't totally misguided — IT is different in that it permeates a corporation to a degree that other functions do not. Paradoxically, that difference demands that IT not be addressed as something unique but be integrated more closely than ever into business strategy. Companies that get it right will reap benefits. In fact, they should run circles around the competition.