This is the second of four articles that explore the outlook for technology spending — and why corporate tech budgets are bound to rise. The other three are IT Outlays Are Poised for Takeoff, which looks at what’s driving the burgeoning budgets; IT Budgeting Descends to Business Units, which reports on the cloud’s role in decentralization; and Effective Tech Spending: a CFO’s View, in which a finance chief tells why her peers need to know a whole lot more about IT.


Advances in information technology seem to be driving changes in the relationship between CFOs and chief information officers and in the role that IT departments play in the budgeting process.

In the past, IT departments were typically evaluated on the basis of whether they brought their projects in on time and on budget, said John Lieblang, the owner of Measured Value business consulting in Detroit and a former CIO.

With cloud solutions and other new technologies, he said, CFOs are expecting their CIOs to demonstrate what the rate of return will be for proposed IT budget items, along with positioning technology to drive down costs or establish innovative solutions.

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With software-as-a-service, for example, IT departments don’t have to handle staging any more or worry about upgrades, bug fixes or maintenance, Lieblang said.

“The transition may be hard. But, on the other hand, it should be very easy now for an IT organization to get the focus on the business drivers and the value-add,” he said. “I think that IT organizations, and the way that IT organizations are being looked at by companies, are at a significant crossroad right now.”

The role of today’s IT department has to change from selecting technology providers to vetting the tech providers chosen by the business unit, said Thoran Rodrigues, the owner of BigData Corp. in Rio de Janeiro, which provides cloud-based big-data services.

That would include making sure that the technology provider will provide benefits, low exit costs, reliability, interoperability, security and the long-term vision that it promised, he said.

The transformation of the IT department’s role can be difficult, especially at large enterprises where the allocation of budget equates to power, Rodrigues said.

“IT needs to evolve, change itself and look at the way it operates,” Rodrigues said. “The CFO really needs to be working with the CIO to put in place the mechanisms that are necessary for IT to change its outlook.”

Change comes about in the IT budgeting process when the progressive CFOs and CIOs examine the rate of return, factoring in total costs, increased savings, revenues and other metrics to determine whether proposed spending makes sense from a business perspective, Lieblang said.

CFOs can help their CIOs make the transition. “If I’m a CIO right now, and I don’t have that business acumen, I should latch on immediately to a CFO, because they have that — it’s just fundamental in their thought process,” he said.

For the CFO and CIO to be effective in the budget process, the right tone has to be set at the top, said Anthony Severini, a senior consultant for 8020 Consulting and a former CFO. The CFO and CIO set the vision, he said, and then they go to their division managers and ask: How do we get there?

 “I think the CIO [role] has transitioned and has transformed a lot from where it started,” Severini said. “Originally, the CIO was in a supportive role, and listened to the CFO say ‘I need XYZ, now go do it,’” he added. Now, I think the CIO is at the executive table with everyone else, explaining his value and how it’s going to support the company and help it grow faster.”

“CIOs have to be two, three years out, seeing what the next stuff is and where the company is headed, so it can integrate all of that,” Severini said.

“I think it’s very important for the CFO to show [the CIO]: You don’t have to be so operational,” Rodrigues said. “You can think about things and look at things more strategically.”

Information chiefs should take the perspective that they’re yielding budget control in exchange for an opportunity to look at technology at a more strategic level. They should “do the vetting process for technologies and take back the role of presenting new technologies to the end user,” he said.

Companies shouldn’t have separate innovation and IT departments—innovation should be a role for the IT department, Rodrigues said.

“A lot of people that are in IT would agree that they would much prefer that their job was more about looking at new technologies and presenting new technologies to the business,” he added, “rather than doing the operational day-to-day, help-desk support stuff that most IT departments end up doing.”

Traditionally, it was not unusual for IT projects to be delivered late and over budget. Thus, expectations of delays and overruns were typically built in to the budget process.

With cloud solutions, IT project turnaround times are much shorter and the projects are much simpler. Because of that, CFOs should expect their delivery to be on time and under budget, Rodrigues said.


This is the second of four articles that explore the outlook for technology spending — and why corporate tech budgets are bound to rise. The other three are IT Outlays Are Poised for Takeoff, which looks at what’s driving the burgeoning budgets; IT Budgeting Descends to Business Units, which reports on the cloud’s role in decentralization; and Effective Tech Spending: a CFO’s View, in which a finance chief tells why her peers need to know a whole lot more about IT.


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