CIO vs. CFO: Who’s Going To Win This Battle?

by drjim on February 9, 2011

The Company's CFO Is Going To Be Watching The CIO…

The Company’s CFO Is Going To Be Watching The CIO…

When you become CIO you are going to discover one of the realities of IT life: you are not in complete control of the IT department. Rather, you are in charge of determining how to spend the money that the company allocates to IT. It turns out that how and how much money gets allocated is controlled by non other than the CFO. Are you ready for a corporate battle?

What’s In It For Me?

The CFO is always going to be looking over your shoulder when you become CIO. He / she will be trying to figure out what you are doing with the money that the company has allocated to you. This means that you’re going to have to do a good job.

One of the biggest issues that every CIO faces is dealing with your IT managers. While they may be excellent technical professionals, deep in their hearts they all want the same thing: more money to fund their team.

IT managers want more money so that their teams can do more. Their thinking is, perhaps rightly so, focused on only their team. As CIO you need to take the broader view: what’s best for the IT department and the company?

As CIO you are going to have to divide your limited IT budget into two groups: strategic and non-strategic spending. Everyone can probably agree on the strategic portion of the budget, it’s the non-strategic part that you need to be careful with.

Here you are going to have to establish what percentage of the overall IT budget you are going to be willing to allocate to non-strategic IT activities. Once you’ve determined how big the non-strategic pie is, you are going to have to split it among your managers in a fair way.

Once this is done, so that you don’t get caught up in daily low-level budgeting activities you need to delegate responsibility for spending it to your IT managers. The rules should be clear: follow your IT department technology standards and ask for permission when you want to buy entirely new systems.

It Takes A Department

Although you will eventually become CIO, I’m willing to bet that you don’t have any magical powers. What this means is that how best to allocate your limited IT budget among your different IT managers (which is what the CFO will be watching) needs to be done carefully.

Making your IT managers bring their proposed spending plans out into the open is the best way to inhibit IT silo building activities. A good way to accomplish this is to set up an IT department technology review board made up of IT department and finance department members who will review proposed projects.

The goal of such a committee will be very simple. They will evaluate proposed IT projects against the company’s stated objectives and attempt to determine if the project supports the objectives or is simply designed to build someone’s silo.

In IT we all like to buy the most powerful system available – and vendors always steer us towards them. However, another goal of the review committee that contains non-technical members would be to question just how much computing power is really needed in order to accomplish the task at hand.

What All Of This Means For You

Being a CIO is not all about new technologies and how best to solve business problems with them. Instead there is a lot of financial work that you will be responsible for and the company’s CIO is going to be breathing down your neck in order to make sure that you do a good job of spending the money that the company gives you.

In order to do a good job of this, you are going to have to control how your IT managers spend your money. One way to do this is to separate strategic from non-strategic IT spending. Allocate non-strategic budget fairly and then create a committee made of IT and finance staff to watch over how it gets spent.

No CIO looks forward to the effort that is involved in doing a good job of obtaining and spending your IT budget. However, if you can prevent IT silos from being built and instead make sure that the company’s objectives are being met by the IT department then you’ll quickly become the CFO’s best friend.

– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World IT Department Leadership Skills™

Question For You: What do you think is the best way to choose who will be on the IT budget review committee?

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What We’ll Be Talking About Next Time

So at a high level, we all know that a CIO can add value to how a company is run. We know that by managing the IT department and motivating the IT staff, the CIO can keep the email system up and the network running. However, that’s not good enough. How can the CIO really transform the company? What does he / she need to do to make a difference? Turns out that over at Ascend One, they know the answer to this question…

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