Finance officers take keener interest in IT spend

Opinion

Finance officers take keener interest in IT spend

So the finance people are starting to take much closer control of IT spending. According to a study, chief financial officers (CFOs) have authorisation for 26% of all IT investment compared to 5% for chief information officers (CIOs).

In addition more IT organisations report direct to the CFO compared to 33% reporting direct to the CEO. This may not be so surprising given the study's findings that only 30% of organisations believe IT fulfils its mission, suggesting there is a danger too much purchasing is conducted on what the IT department thinks about the technology rather than what it can do for the business.

But the seeds for why this level of dissatisfaction exists might also lie in the fact that 72% of respondents said they would invest where they see a competitive advantage driven by IT. Whatever the merits of IT in areas such as business intelligence and business applications (identified as the highest investment priorities in the study), seeing it as a driver for competitive advantage rather than a potential enabler to help a company achieve competitive advantage is probably a recipe for disappointment.

What you need to do with the IT is probably more important than what the IT can (theoretically) do. If a company has bad business processes, adding IT won't miraculously make it a better company. 

The trend, if anything, with current hot technological developments such as cloud computing and SaaS, is to move towards IT as a platform for delivering business processes in a standardised and simplified manner in much the same way as electricity and water is delivered. 

In this scenario, quality of supply is important, although there are very few people likely to invest in their own bespoke water and electricity plants in a bid to deliver a worthwhile competitive advantage over their rivals.

It seems to me the primary reason for involving CFOs as the final arbiters of IT spending decisions is to make sure the fundamental question of "why am I spending the company's money on IT" is answered satisfactorily. 

In many cases, "competitive advantage" is unlikely to be the right response because it is often too hard to define or measure. Competitive against who? Advantageous in what way? I often wonder if the only ones gaining "competitive advantage" are the people who sell the system and win another customer rather than the client who buys it.

This was first published in July 2011

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