"Finance is the language of business decisions." True, or merely the imperialistic mindset of the MBA at work? Agree or disagree, without some common language, decisions will not be made, and finance is at least a language tied to relatively objective facts.
A common language, as I've noted, often seems to be lacking between IT and lawyers, and I suggested that a joint IT/lawyer advisory council could help ameliorate that problem. Now let's dimensionalize how that might work a little more clearly.
In corporate-land, the primary antagonist of IT is usually the CFO. IT overspends, underdelivers, can't present credible ROI numbers for any of its projects, wants to grow its headcount and budget faster than the rest of the company, is (kiss of death!) a "cost center," and you can add further counts to the indictment as you wish. So what are companies doing about it? According to McKinsey, they're forcing dialogue: The number of CIO's reporting to the CFO doubled in 2003, and McKinsey expects the trend to continue.
What's going on here? The goal is to give CIO's the proverbial "seat at the table," and to bring them into strategic planning for the firm while they can still have an impact. In practice, the CFO usually doesn't really grok IT—and he's not about to learn. That means that if the CIO is to have a voice, he better be able to speak financial-ease. Some companies, like Saucony (the athletic shoe-maker) have solved the problem by hiring a CIO and a head of MIS with pure finance backgrounds, according to this CFO article. Less radically, other companies simply ensure that business line-managers are involved in deciding what IT initiatives to undertake so that they perforce reflect the firm's strategic direction (and have "buy-in" before they're even born).
Strategy is the key word. If your CIO not only can think strategically, but has a mandate to do so, "alignment" with the CFO is, barring personal-chemistry malfunctions, guaranteed. Uniting finance, IT, and strategy can bring about what could be called "budget-conscious strategic advantage:" A competitive distinction supported by IT infrastructure developed under rigorous financial scrutiny.
And, in case you were wondering, I thoroughly endorse the opening quote. For business decisions, finance is the first and last word.
(For personnel, community- or family-related, ethical, and many other decisions, finance should barely be allowed to look over your shoulder—just for the record, and so you don't think me an unreconstructed capitalist; but those decisions are beyond the scope of this blog.)
September 22, 2004 3:46 PM
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