IT Financial Management – How To Deliver Increased Value?

I recently listened to a webinar featuring Brian James, Director of IT Business Management Marketing at VMware, and Jim Malone, Executive Editorial Director of IDG Enterprise Custom Solutions Group. The webinar focused on the recent results of CIO magazine’s survey of over 150 CIOs/IT Executives on trends in optimizing IT costs and expectations of what leaders are doing now to deliver increased value from IT investments.

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As I’ve mentioned before, at DCG we advocate the use of the IT Capability Maturity Framework (IT-CMF) to help businesses maximize and showcase the value of IT, particularly to those outside of IT. As this webinar clearly displayed, many CIOs and IT executives are having difficulty doing just this – at the expense of IT.

According to 77 percent of the survey respondents, there is a greater demand for IT now than in the previous year; that is, the business is asking more of IT. However, 33 percent of respondents also noted that their budgets have not changed; so, IT is being asked to do more, but without an increased budget to support those efforts. According to the presenters, this is likely because in the past, executives used to throw money at IT, but with a downturn in the economy, budgets are tightening. The issue is that CIOs and IT executives are unable to justify an increased budget – they have the challenge of showing that the demand for more services requires more money.

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So, it’s not a surprise that most of the respondents (73%) declared that the ability to justify IT costs is critical or very important. Or, that 66 percent said that it is critical or very important to be able to track IT spending allocation. But, the effectiveness of IT to execute on these capabilities doesn’t match up. A Gap Analysis indicated a 23 point gap between the the importance of being able to adequately justify IT costs and budget questions and IT’s ability to do so effectively, as well as a 10 point gap in the importance of tracking IT spending versus IT’s ability to do so effectively.

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Overall, the survey results revealed an ongoing issue with IT’s ability to gather, process and disseminate consumable information about IT for those not intimately familiar with the unit. IT financial management is a process that involves interfacing with a range of systems, departments and people – all with different priorities – and IT needs to learn to adapt.

IT knows that it needs to do more when it comes to helping the business understand what it does and how it brings value to the entire business, but little progress has been made in this direction.

IT-CMF helps companies tackle the problems that many of the respondents in this survey are facing, ensuring that IT is seen as an effective department capable of generating profits and adding obvious value to the business.

Learn more about IT-CMF on our website, and please let us know if you have any questions. Implementing this framework is the first step towards solving one of the biggest challenges facing IT today.

Do you agree with CIO’s findings? How do you think IT can do a better job of showcasing its value? And, if you’re a CIO, what’s stopping you from making any changes in how you report IT figures to the business?


Mike Harris
DCG President

Written by Michael D. Harris at 12:17

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