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IT Directions ’06

As a new year begins, Sarbox and governance converge — and new technology takes a holiday.

Moving forward more thoughtfully is essentially what IT governance is all about, and analysts expect it to gain steam in 2006. At The Hartford, a Capital Planning & Portfolio Management group performs “benefit capture” audits as IT projects are completed to assess how well they delivered expected returns, says Bock. And the group approves all new projects by applying a consistent cost/benefit methodology so that capital is allocated based on an “apples-to-apples” comparison. But ultimately, she adds, finance plays a consultative role with IT, rather than being in a position of direct oversight.

That seems to be the way most CFOs want: our survey found that while 31 percent of CFOs believe IT should report to finance, almost twice as many (59 percent) think it shouldn’t, but that the two groups should work closely on a range of strategy issues. (Only 5 percent thought that the two should collaborate only on matters of spending, while 6 percent thought they should operate independent of each other.) That issue will likely remain up for debate in 2006 as CFOs acknowledge that the relationship can be a balancing act.

“Finance has to play both an oversight and a consultative role, and play them both well,” maintains Blake of Kaiser Permanente. “There are times you must have oversight and times you consult.” But in an oversight role, he says, finance has to be discerning about budget decisions or risk thwarting strategic growth. For example, if the finance department issues a blanket reduction in all IT expenses, “you can start shutting down meaningful conversations that need to happen between finance and IT,” says Blake.

Whatever happens, it won’t entail a big increase in IT budgets. Numerous surveys indicate modest single-digit increases will be the norm. But expect companies to vary greatly in their ability to extract maximum impact from precious dollars.

Bob Violino is a freelance business and technology writer based in Massapequa Park, New York.

Searching for a Silver Lining

Doing more with Sarbox software.

Ask Tracy Schmidt, CFO at CNL Financial Group, about the many costs associated with Sarbanes-Oxley compliance, and his answer will resonate with many of his peers. “It’s a high price for a questionable benefit,” he says.

But as companies get past their first audits and look ahead, many are seeing a potential silver lining and believe that the IT component of Sarbox may pay off in unexpected ways. “Most companies are still trying to get comfortable with the changes brought about by Sarbox,” says Forrester Research Inc. analyst Michael Rasmussen. “But a number of them — maybe 10 percent at this point — are beginning to try to leverage their Sarbox investments.”

“After spending significant time, money, and effort,” says Michael J. Schroeck, a partner and the global business intelligence (BI) leader for IBM Business Consulting Services, “companies have controls in place. Now they’re asking how they can derive more value from their investments.”

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