Posts Tagged ‘finance’

How CIOs Can Get What They Don’t Have (But Really Need)

Wednesday, September 15th, 2010
Image Credit CIO's Have To Take The Time To Learn What They Don't Know

CIO's Have To Take The Time To Learn What They Don't Know

Not being invited to sit at the company’s strategy table is a problem that has plagued CIOs since the position was invented. Instead of just talking about the problem, it’s high time we did something to turn things around. But what should we do?

Skill Building

The reason that CIOs aren’t being invited asked to contribute in a significant way to the types of decisions that go into running the company as a whole is because the rest of the senior management team doesn’t believe that the CIO has the skills that are needed to contribute to this process in a meaningful way. Unfortunately they are correct more often than not.

Sure, your average CIO has the technical skill set that got him / her into the position that they now hold; however, that’s not enough to get them invited to participate in running the company in a meaningful way. What they are viewed as missing are critical skills such as finance, marketing, R&D, etc.

Coming Up With A Plan

In an ideal world, a newly minted CIO would be able to sign up for a specialized course (or set of courses) that would teach the very skills that he / she is missing. We’re not talking about college courses here, these would have to be very specialized.

What the CIO would want to (really have to) learn is exactly what the role of IT needs to be in order to help each of the other parts of the company. The focus wouldn’t be on technology, but rather it would be on just exactly how IT could be used to maximize the performance of each of the pieces that make up the company. An emphasis on how things are in the real-world instead of in dry textbooks would also be a key to successful leaning.

How To Do This In The Real World

Sadly, I don’t think that such a set of courses currently exists. Don’t give up hope, it just means that when you become CIO you’re going to have to take a different path. Your home-brew educational program is going to have to consist of three main steps:

  1. every company has a set of educational programs that they offer. Generally these are designed to teach workers about what the company does and just exactly how it does it. These courses are often taught by other workers who have years of experience. CIOs need to sign up and show up for these classes – the information that they’ll cover is like gold to a CIO.

  2. Eat Lunch With Different People Every Day: CIOs need to introduce themselves to as many managers throughout the company as possible. This is how they are going to learn how the different departments work and what challenges they are facing. This isn’t exactly a classroom, but rather it’s like getting a complete education one conversation at a time.

  3. Forget About Technology: While a CIO is learning about the different parts that make up the company and just exactly what they do, issues of technology need to be left behind. Once an understanding of how the company runs has been achieved, then the technology discussions can start, but while the learning is going on the CIO needs to shut up and fit in.

What All Of This Means For You

CIOs don’t know what they don’t know. This is what is keeping them from being invited by the rest of a company’s senior management to participate in the business of plotting out the company’s strategic direction. CIO’s need to get the training that will provide them with the skills that they are missing.

Although specialized training would be the best way to do get this information, CIOs are going to have to build their own training program. This will include signing up for internal company courses, talking with managers from other departments, and leaving technology behind for awhile.

In the end, a CIO is the one person in the company who is best positioned to find ways to use technology to solve the problems that the company is facing. However, before they can do that, they’ve got to go back to school and do some more learning…

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

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Question For You: Which department do you think is the most important for the CIO to find out more about first?

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What We’ll Be Talking About Next Time

If you had to sit back for just a moment and come up with an answer to the question: what are CIOs doing wrong, what would that answer be? I think that the answer would be that we are spending too much time trying to solve problems in ways that really don’t help the rest of the company that much…

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Posted in soft skills | 1 Comment »

Satyam Scandal: CIOs Need To Talk With Their CFOs

Monday, June 29th, 2009
Fraud At Satyam Means That How CIOs Do Outsourcing Needs To Be Rethought

Fraud At Satyam Means That How CIOs Do Outsourcing Needs To Be Rethought

Didn’t we solve that whole outsourcing thing years ago? Specifically aren’t the IT and the Finance departments on the same page when it comes to not only IF we should outsource some of the IT work, but also HOW it should be outsourced? If this is true, than what does the Satyam scandal mean for your IT / Finance relationship?

The Satyam Scandal

Just in case there is anyone out there who doesn’t know what happened at Satyam, perhaps a quick review is in order. Satyam Computer Services is based in India, has a work force of 53,000 and operations in 66 countries. They were very successful and served more than a third of the U.S. Fortune 500 companies.

Back in January the then CEO of Satyam, Ramalinga Raju, revealed that he and his CFO had been conducting a massive fraud – they significantly inflated its earnings and assets for years. Basically they were losing money hand over foot. In January they revealed that 50.4 billion rupees, or $1.04 billion, of the 53.6 billion rupees in cash and bank loans the company listed as assets for its second quarter, which ended in September, were nonexistent. Poof!

Impact Of The Fraud

What this means for firms that do outsourcing business with Satyam is that the firm might fold any day (perhaps you are one of these firms!). All of a sudden, outsourcing contracts that had appeared to be solid now seem to be not so solid. Most firms that outsource their work don’t necessarily have a good contingency plan for what to do if their outsourcing partner is suddenly unable to perform the work.

What Needs To Be Done

The Satyma scandal should serve as a wake-up call to CIOs everywhere. Oursourcing can never be done the same as it’s been done in the past. Here’s what needs to change:

  • Finance Needs To Play A Role: the IT department is responsible for making sure that the outsourcing company has the needed technical skills, but the Finance department needs to play a bigger role to make sure that the outsourcing firm can stay in business over time.
  • More Baskets For Your Eggs: it’s time to start to diversify your outsourcing activities in order to lower your risk profile. Detailed technical work needs to be moved around every so often so that not just one vendor knows how to do the work.
  • Update Your Contracts: create shorter contracts that are more flexible. Make sure that you are not tied to a given outsourcer for too long just in case things start to go wrong – you might want to move your work to another outsourcer quickly.

Final Thoughts

India has now had their version of Enron / Worldcom. Hopefully it will serve as a wakeup call for all CIOs who outsource their work that greater due diligence needs to be done even as the world continues to move faster. By working more closely with Finance, CIOs can apply IT to enable the rest of the company to grow quicker, move faster, and do more.

Questions For You

When you selected an outsourcer, did you do a detailed financial due diligence on them? Was your finance department involved? Has your finance department remained involved in evaluating the health of your outsourcer(s)? Do you have a contingency plan in place that you could us if your outsourcer went out of business? Leave me a comment and let me know what you are thinking.

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What We’ll Be Talking About Next Time

Data Security. There I said it. It sorta lays there like a big lump of coal and everyone in the company stands around looking at it wondering who’s responsibility it is to do something about it.

Nobody, including CIOs really wants to touch it for one very simple reason: it’s a losing proposition…

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Posted in outsource | No Comments »

What CIOs Need To Know About Performance Management

Monday, April 13th, 2009
Companies Don't Need Business Intelligence Without Performance Management

Companies Don't Need Business Intelligence Without Performance Management

Unless you’ve been asleep for the past couple of years, you’ve probably had a chance to read about the Business Intelligence (BI) fad that seem to have taken over the IT market.

The basic idea is pretty simple: use an application to crunch all of that complicated data that you’ve been gathering and present a simple dashboard to the CEO or whomever is making decisions. If the light on the dashboard is green, then the business is doing well. If its red, then he / she needs to make some changes. As with all such things in life, cool tools often turn out to have a downside.

It turns out that BI tools and the reports that they generate are IT centric. This means that the rest of the company agrees that they look cool, but they don’t find them as useful as we would like them to. It turns out that what they’d really like to have is performance management (PM) tools.

Performance management is defined by business needs and it provides the business’ decision makers with the data that they require in order to make the right moves in order to execute the business’ strategy.

PM shows up in a bunch of different places inside of the company. You’ll see it in the budgeting & financial processes (there it’s called “corporate” or “financial” PM). You can also find it on the operational side of the house. This is where BI is used to get more insights into supply chains, sales, customer service, etc.

I guess the easiest way to communicate the difference is to point out that BI is often about dashboards and scorecards. BI has been based on things that can be collected and measured. Where PM differs, is that it’s based on where the company WANTS to go.

This means that PM tools have to be created by consolidating  disparate data that is often stored in planning / budgeting spreadsheets. Then these planning activities and strategies then need to be transformed by both the business and IT into scorecards and key performance indicators (KPI).

The thing that sets PM apart from BI is that the information that IT collects to support a PM process is tied to a model or a framework for measuring performance. In finance, this model is the company’s budget. However, once you move outside of finance then IT and the business need to work together to create a budget that they can both live with.

Does your company currently use BI tools? Are they useful or are they just a set of pretty dashboards that sit around? Do you make use of performance management? Does your IT department work with the business to create performance management processes? Leave me a comment and let me know what you are thinking.

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Posted in business alignment | 1 Comment »