Tuning the Orchestra: IT and the CFO
by Terri Eyden on
By David Hurwitz, Senior Vice President of Worldwide Marketing, Serena Software
Business functions once had very clear roles and responsibilities: finance looked after the money and IT was a distinct unit responsible for back office technology and communications. However, responsibility for IT decisions is changing.
While this might take time to become a reality for the majority of organizations, it is already happening in some companies as they look to build competitive advantage around their online strategies. Responsibility for IT is increasingly becoming an issue for business leadership, including the CFO. This change in responsibilities requires CFOs to extend their skills based on the kinds of capabilities that IT empowers.
Since large-scale IT systems can account for significant budget outlays, financial leadership has often been involved in certain types of decision making around enterprise IT procurement, but this has been limited to just a "sign-off" capacity. As familiarity with technology has grown, and IT has shifted from back office to customer facing, the potential role for the CFO in IT decision making has grown.
Cloud computing has a role in this transition, since it involves using third-party service providers rather than owning the hardware and software assets. Cloud IT also introduces a "pay-as-you-go" model, rather than relying on capital expenditure. However, the change in financing needs to take a backseat to the revenue-driving nature of today's "IT systems."
A new paradigm is created with organizations actually having a decision to make: should IT operations move from strict control of the IT department and out into the business units themselves.
The change of responsibility from CFO to business means finance professionals must understand the value, opposed to the cost, of new technology. While CFOs will not necessarily want, or need, to understand each new implementation in great detail, they will certainly require more analysis of the IT components of business initiatives and how it connects with requests for support that each the business and IT is making.
5 Tips for the CFO about IT
- CFOs need to be conversant in IT financial and performance metrics now that IT systems deliver revenue and perform other front line functions.
- CFOs need to know the financial trade-offs between on-premises and Cloud-based systems.
- CFOs need to hold general managers responsible for accurately forecasting the costs and capital requirements of their online businesses.
- CFOs need to hold general managers accountable for creating transparent and repeatable processes within how they support their online businesses.
- CFOs need to make sure that IT service management functions are fully attuned to the needs of businesses that depend on externally facing systems.
‒ David Hurwitz
This means having an IT management overview of what is happening, and metrics against which to judge IT success. From the CFO perspective, this requires insight into what processes are in place and where they link up. This understanding of how individual services or teams connect in order to deliver results is important. As in so many things, the final result is much more important than the sum of the parts.
The emphasis on process around IT requires a more in-depth approach to management. This orchestration technique involves IT management systems bringing together existing tools into a process-driven workflow. Orchestration streamlines the processes involved in delivering IT to make them better connected and, where possible, more automated. As a result, CFOs can save resources and concentrate on overall results rather than individual IT projects.
Orchestration not only rationalizes and optimizes workflows within IT, but also extends into the rest of the enterprise. This is essential for providing oversight into where projects or requests are within the business as well as insight into where bottlenecks are being encountered.
For CFOs seeking to understand IT, looking at where the organization is now and where it wants to be in the future is essential. This will include ensuring that IT is meeting its business requirements in a straightforward, easy-to-understand manner. Analytic tools provide this information in a dashboard format enabling executives to quickly identify which projects are running on schedule and which are not. If more information on projects is required, then a CFO can drill down into the process itself, rather than looking at specific technology projects in isolation. Without the right orchestration strategy and processes in place, it is not easy to aggregate this information into the kind of data that can be used for effective decision making.
Companies with online components to their business are voracious consumers of IT. However, the manner in which companies manage their use of IT resources will have to change. In order to keep up with the many new trends affecting business technology, the CFO must understand which tools exist for delivering efficiency and cost benefits. Techniques such as orchestration can help streamline processes and deliver individual projects, like developing applications in a more efficient way, but there is an opportunity to improve IT service performance across the organization as a whole.
Ultimately, this change in management leads to lesser overall technology costs, without sacrificing the potential for business agility and faster performance. By ensuring their understanding of key IT metrics, CFOs can both keep hold of expenses but move their organizations forward.
- Four Things Accountants Must Do to Keep Up with Technology
- 'Financial Fitness' and Accounting Firm Improvement
About the author:
David Hurwitz, senior vice president of Worldwide Marketing, Serena Software began his career as a software engineer for legendary Silicon Valley company ASK Computer Systems, the pioneering enterprise applications company. He has spent the twenty-five years since around enterprise IT, helping businesses benefit from it and IT leaders be more effective at it. Hurwitz holds a BS in Industrial Engineering from the Rochester Institute of Technology. His senior project applied animated simulation to industrial robotics for more effective manufacturing results.
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