In today’s digital age, the Chief Information Officer (CIO) plays a critical role in the financial success of any organization. CIOs take responsibility for managing the organization’s IT budget. They ensure that its technology investments are aligned with its business goals. This requires CIOs to have a strong understanding of finance. CIOs need to think financially—that is to say they need to exercise the fiscal responsibility of a CFO.
What does this mean?
While this may seem like a no-brainer, the question remains: What does it mean for a CIO to exercise fiscal responsibility? It means making wise decisions about how to allocate the organization’s limited resources. It also means, in the context of IT, investing in technologies that will provide the greatest value to the organization and avoiding unnecessary spending. A CIO needs to juggle between the feasibility of Capex vs Opex.
What does “think financially” look like?
How can CIOs treat technology expenses with a critical eye on optimizing value? While there are several avenues to getting this done, we’ve highlighted four here:
- Develop a clear understanding of the organization’s business goals. The key questions include: What are the organization’s top priorities? What challenges is it facing? What opportunities is it trying to capitalize on? Once a CIO has a clear understanding of the organization’s business goals, they can better assess the value of potential technology investments.
- Conduct a thorough risk assessment. A CIO needs to ask: Are there risks associated with each potential technology investment? What are these risks? What are the potential consequences of a failed investment? CIOs need to weigh the risks and benefits of each investment before deciding.
- Negotiate competitive pricing. CIOs should negotiate competitive pricing with vendors and suppliers. They should also be willing to walk away from a deal if they are not getting the best possible value.
- Monitor and evaluate IT investments. CIOs need to track the performance of their IT investments and make sure that they are delivering the expected value. They should also be willing to adjust or cancel investments that are not meeting expectations. Part of the process includes defining clear success metrics. The ability to walk away from a failed initiative before a “small loss” becomes a “huge liability” is critical.
By following these tips, CIOs can balance the desire for the latest technology with the demands of fiscal responsibility. They can start to treat technology expenses with a critical eye on optimizing value. This helps to ensure that their organization’s IT investments are aligned with stated business goals and that value is optimized.
When a CIO is able—and willing—to treat their technology initiatives with the fiscal responsibility of a CFO, amazing things can happen. They monitor initiatives with a critical eye. They optimize expenses and create efficiencies. CIOs can help to ensure that their organization’s IT investments are aligned with its business goals and that they are getting the most value for the company’s money. If you’re ready to think financially, we’re listening. Contact us today to talk.