How Much Money Will The CIO Save The Company This Year?

by drjim on August 28, 2013

How much money will all of those IT projects put in the bank this year?

How much money will all of those IT projects put in the bank this year?
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Us CIOs are a very optimistic lot. If you take a survey of CIOs more often than not what you’re going to find out is that we truly do believe in the importance of information technology and we believe that each and every IT project that the IT department is scheduled to work on this year is going to result in money being saved for the company. How very interesting considering how much money past IT projects have cost the company…

IT Will Be Better In The Future

Let’s talk about what’s going on here. Those of us in the CIO job seem to have a credibility problem with the rest of the company: we think that our IT projects are going to save the company a lot of money when they really don’t.

Right now CIOs probably have a number of projects in their department that they are trying to get funding for: virtualiztion, mobile apps, big data, cloud, and mobile device management. Is it even possible for CIOs to tell the rest of the company that all of these projects, if funded, will end up saving the company money?

Why do CIOs feel this way? It turns out that we believe that we are more in charge than we really are. Our so-called “optimistic biases” come about because we believe that events are controllable. Feeling this way allows us to become emotionally invested in the outcome of an IT project and can cloud our vision of what is going on.

All too often we CIOs promise the company longer term paybacks – fund my IT project today and I promise you that I’ll save you money tomorrow. This rarely seems to happen. In order to bring IT projects more into alignment with the rest of the world, we need to start to use more conservative financial management principles – under promise the revenues that our IT projects will deliver and overestimate the costs of the projects.

What CIOs Really Spend Their Projects Working On

If the majority of our IT projects don’t actually produce the return that we claim that they will, this leads to the big question: why? One of the key reasons comes down to the types of projects that most IT departments are currently involved in: very basic infrastructure projects.

Keep in mind that we all recently lived through a global economic recession. This meant that IT budgets for the past few years have been shrinking. As budgets got smaller, CIOs were forced to abandon the fancy new-fangled technology projects and instead focus on more “keep the lights on” types of projects.

This means that CIOs will be asking the rest of the company to fund projects that will allow the company to keep the infrastructure to keep moving forward. What’s going to have to happen is that the IT department is going to have to be able to secure project specific funding from business units that have very specific needs. This additional budget will allow the IT department to roll out the projects that will have a real bottom line impact on the company.

What All Of This Means For You

CIOs are always very optimistic. Perhaps just a bit too optimistic. Despite the problems that our IT projects have run into in the past, if you asked us how our projects were going to turn out this year, we’d all tell you that we were going to be saving the company money.

The problem with all of this optimism is that it’s unjustified. Despite issues that have caused IT projects to overrun their budgets in the past and not deliver promised results, CIOs still think that this year will be different. All too often the IT projects that our department is going to be working on this year are basic infrastructure tasks that will just “keep the lights on” and not yield any great cost savings.

What needs to change? It’s pretty simple: if you are in the CIO position then you need to spend more time talking with their CEOs and CFOs. It’s important that the projects that IT works on this year line up with what the company is expecting to get out of the IT department. This sounds simple to do, but it turns out that this may be one of the most difficult things that you’ll be asked to do as a CIO.

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

Question For You: What do you think the right mix of sustaining and innovative IT projects is?

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What We’ll Be Talking About Next Time

Not sure if you’ve heard about this one, but on Thursday, August 22, 2013, the American Nasdaq stock exchange was shut down for three hours because of a communication problem. Investigators are still trying to understand exactly what happened; however, we should probably asking ourselves if this problem was caused by the Nasdaq’s CIO?

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