Time was, chief financial officers regarded IT departments as a financial black-hole. A whole lot of capital went in, but precious little light came out. What’s more, the gadgets normally used to measure return on investments simply did not work in that heavy gravitational field.
But oh, how times have changed. With e-commerce now a business imperative, technology is moving into the spotlight as a revenue generator. And as such, CFOs are bound and determined to take some readings from the field. So determined, in fact, that many management teams have begun deploying metrics to gauge the cost-effectiveness of IT projects (see “Mad to Measure).”
“The CFO wants to be more involved in the CIO’s mission and take direct responsibility because of the CIO’s increasing importance to the bottom line of the company,” says Jack Schiff, program manager at Getronics, a global technology services company. According to a recent Getronics survey of 288 CFOs, 84 percent said they believe IT is very important or crucial to revenue/profit growth. The survey also found that finance chiefs want to have more of a say in how tech spends money.
Of course, getting the most out of IT investments generally means getting the most out of IT workers. Affixing hard numbers to the mercurial contributions of tech employees can be tricky stuff, however. And without such numbers, it’s nearly impossible to judge if the pet projects of IT managers actually jibe with a company’s business strategies.
To get everybody pulling in the same direction, executives at some corporations have begun considering applying the balanced scorecard method to tech workers. While a balanced scorecard approach will undoubtedly help CFOs get a better handle on how tech employees are performing — and would help managers align IT agendas with corporate strategy — creating such a beast is no easy task. In fact, it appears that many finance chiefs are taking fairly small steps when setting up IT scorecards.
No More Ticking Packages
Take the case of United Concordia Companies Inc., a $900 million-in-revenues dental insurance company based in Harrisburg, Pennsylvania. “Historically, what we’ve done is look at IT projects from a return on investment,” says CFO Daniel Wright. “There’s a certain amount we understand we have to spend to keep our systems going. But for projects, we look at what’s going to be the payback in terms of new revenue, expense reduction, that sort of thing.”
After a few tech projects came in late and over budget, however, Wright says company management decided something had to change. “A better appreciation for cost was needed,” Wright says bluntly.
So last December, United Concordia instituted a service excellence initiative for its IT staff. The goal? “To look at the productivity [of IT workers] so we get more bang for our buck,” explains the company CFO. Although the insurer has outsourced the initiative to a consultant, Wright insists that the program will be “built into the fabric of how [the IT staff] manage their activities on a daily basis.”