Even more challenging is realignment mode, where IT is operating well but retooling is required — for example, for a new business strategy, like a big acquisitions push. You may not have to alter IT’s capabilities overnight, but start educating the CIO right away about the strategic shift the business will undergo. The goal is to drive the future view down through the IT organization so that by the time change is at hand, the right people and skills are in place.
• What role does IT play in the organization?
It may be a “solid utility,” which predominantly supports the business through back-office processing; the requirements there are for high volume and reliability at a low cost, says Forrester Research analyst Craig Symons. It could be a “trusted supplier,” which also develops applications to improve the business. At the far end of the spectrum is the “partner player,” which provides a high level of strategic innovation such as a high-growth or financial-services business might require.
Determining the role isn’t difficult, says Symons, but CFOs should beware the temptation to always view IT through a cost lens and thus mislabel a partner player as a solid utility.
• What is the relationship between IT and the organization’s key risks?
Get a feel for the IT-related controls over risks involving compliance, operations, industry-specific regulations, and data security. If an IT-specific risk assessment has not been performed recently, make it a priority, says Khalid Wasti, director of enterprise risk services for Deloitte & Touche. Look at how controls are tested and make sure they conform to an integrated control framework like COBIT. The CFO of a public company already will have attested to the adequacy of controls, but the IT-oversight role can provide a platform for a more informed view.
Next: Revisit Spending
Do whatever you can to discourage provincialism on the part of line leaders and functional managers. There is always stiff competition for IT resources, and they may emphasize getting their own jobs done while ignoring what’s best for the company overall. “When all that interests someone is, say, how to sell Taco Bell Grandes in Pennsylvania, there may be an opportunity cost, because if that effort gets funding then other things won’t get funded,” says Cramm, a onetime CIO at the fast-food chain.
The antidote to business leaders who work counter to long-term strategic investments, Cramm suggests, is to cap the percentage of the IT budget devoted to nonstrategic enhancements, disperse it equitably, then delegate authority: line leaders can use the money as they see fit, as long as they adhere to the company’s technology standards and don’t buy new systems, which should require higher-level approval.
Deciding how to allocate the funds is never easy, but a cross-functional technology-governance structure provides the best chance. “The CFO should set up organizationwide decision-making around the relative priority of different ideas, which addresses whether people are supporting the enterprise or just building their silos,” Cramm says.