Posts Tagged ‘IT budget’

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

Wednesday, February 9th, 2011
Image Credit 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?

Click here to get automatic updates when The Accidental Successful CIO Blog is updated.
P.S.: Free subscriptions to The Accidental Successful CIO Newsletter are now available. Learn what you need to know to do the job. Subscribe now: Click Here!

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…

Tags: , , , , , , , ,
Posted in finance | No Comments »

Pay Up!: How CIOs Get Departments To Pay For Their Share Of IT

Wednesday, October 28th, 2009
Image Credit 1-800-Flowers Found A Way To Make Everyone Pay

1-800-Flowers Found A Way To Make Everyone Pay

Everybody wants their IT services for free. When you become the CIO, you’ve got to find an answer to the ugly question of just who’s going to pay you for all of those fancy IT services that your department can provide.

Sometimes there’s a single IT budget for the entire company that everyone draws from. But who gets what? Does everyone get the same amount? Do successful departments get more IT services than other departments? If they don’t, then will they start to set up their own IT department? Looks like another problem that you’re going to have to solve when you are the CIO…

Budget, Budget, Who’s Got The IT Budget?

In most of the civilized world clean drinking water is freely available all the time. Since it’s always available and we don’t really pay very much for it, we use it like there is no tomorrow.

Who cares about leaky faucets? Run the yard sprinklers, fill the pool, etc. – there’s really no cost to being wasteful with the stuff. This is all fine and good until something happens. When there is a sudden scarcity of water, all of a sudden we become much more aware of just how valuable it is.

I live in Florida and when a hurricane (or the threat of one) looms, bottled water is what everyone starts to stock up on. We can go without electricity for days, but not water.

The services provided by IT are the same way – if nobody has to pay for the helpdesk, or the onsite support, or the printer paper, then we all use them like they were free – which they basically are. As a CIO you’ve got a money problem. The internal customers that you serve are going to want you to do more and more for them while at the same time they are going to expect to not have to pay for any of it. Sounds like you’ve got a problem on your hands.

Flower Power

Tim Moran has taken a look at how the company 1-800-Flowers.com has dealt with this very problem. In the case of 1-800-Flowers, they had created a problem by buying other companies who came along with their own IT departments. They centralized the IT services; however, they were left with 14 separate brands and businesses.

Each of these separate businesses uses IT services; however, they didn’t have to pay for them – the IT funding came out of a central budget. This meant that everyone felt free to request as many laptops, Blackberrys, and cell phones as their little hearts desired because they were all, effectively, free to them. You can imagine the CIO headaches that this was causing – there was no financial IT alignment.

Pay To Play Saves The Day

There is a lot of talk about how CIOs need to find ways to innovate within their departments. Over at 1-800-Flowers CIO Steve Bozzo showed some innovation when he decided to solve this problem by starting to charge each of the company’s brands for the IT services that they were using.

It turns out that this isn’t really all that hard to do. There are plenty of good software programs out there that allow you to do this type of item-by-item billing using the Internet to provide online access to the bills. The real challenge is loading all of the data into the system in the first place.

There will be tricky decisions in many areas. Where servers are being used to support applications that are used by multiple departments you are going to have to find ways to divide up the expenses between all parties involved. Bozzo went about transitioning to this new way of doing business in a clever fashion.

Once the internal billing system was set up, he immediately started sending the business heads so-called “mock bills” that showed them what their IT bill would have been if the chargeback process was actually being used. This, of course, caused some shocked business executives to have some hasty discussions with IT.

The new IT billing system went “live” at the start of 1-800-Flowers new fiscal year. Having seen the mock bills and having had time to reduce their IT expenses somewhat allowed each of the business units to request the proper funding for their portion of the annual IT budget. No solution is perfect, but this approach allowed 1-800-Flowers to get a handle on their IT spending.

What This All Means For You

1-800-Flowers is now able to allocate every dollar in their IT budget to a business unit. This includes their entire infrastructure management from servers, security, voice services, to network services.

What this has allowed the company to do is to finally get true insight into just exactly where all of the money that they are spending on IT is going. Although it may not be in your CIO job description, when you become CIO providing this kind of transparency into your IT budget would be a good idea.

Once you are able to convince your firm’s senior management that you are indeed spending wisely the money that they’ve allocated to you, then they’ll be more likely to provide you with additional funding to work on those new projects that you really want to work on.

Do you think that there is any downside to providing so much insight into where the IT dollars are going?

Click here to get automatic updates when The Accidental Successful CIO Blog is updated.

What We’ll Be Talking About Next Time

It turns out that a company’s #1 salesperson is their CIO. They may not go on sales calls, have an assigned quota, or even be up-to-date on the company’s latest product pricing plans, but at the end of the day the CIO is the one who drives (or drives away) the most sales.

Tags: , , , , , , , , , , , , , , , , , , , ,
Posted in finance | 2 Comments »

Poisonous Snakes, Sharp Knives, And Angry Natives: How Much Risk Can You Handle?

Monday, October 19th, 2009
CIOs Know That Security Threats Can Strike At Any Time

CIOs Know That Security Threats Can Strike At Any Time

Ok CIO wannabe, we’re right in the middle of a global financial crisis and your IT budget has gotten slashed so much it looks like Freddie Krueger has come back and had his way with it. What are you going to do about your spending on security programs: cut ‘em, hold the line, or spend more. Whoops – that was a trick question: all of the answers will get you in trouble.

What The Other Guys Are Doing

Before making any big spending decision, any self-respecting CIO will do what all leaders do – try to find out what the other guys are doing in the hopes that you can just copy them. Well, in this case you’ll be getting mixed signals.

A survey done by Information Week magazine revealed that 19% of CIOs are cutting their security spending. On top of that, only 27% of the surveyed CIOs are planning on increasing their security budgets – that leaves roughly 50% doing the same old thing.

Its starting to look as though the final remaining sacred cow of IT budgets, spending on securing the enterprise’s IT assets, has finally fallen under the budget trimming axe. This is an excellent opportunity to learn how to be a better CIO: cut too little and the company goes under, cut too much and the company may get sued when your defenses are breached.

What’s Worse: Poisonous Snakes or Sharp Knives?

Here’s another part of your CIO quiz: when your security budget comes under fire and you know that you’re not going to be able to save the whole platoon, who do you pick to live and who do you let die? Tough call eh? That Information Week CIO survey revealed that most CIOs have decided that any security program that deals with compliance in some way, shape, or form needs to be saved.

In the end, CIOs are finally starting to realize that an effective corporate IT security policy consists of just two things:

  • Managing Risk
  • Protecting Data

Don’t Forget About The Angry Natives -
How CIOs Prioritize

If the job was easy, then anyone could be a CIO. The CIOs who get it, those who understand what effective IT security is really trying to do, know that the first thing that they have to do is to determine the company’s overall appetite for risk. If the company has an appetite for a lot of risk, then the CIO can trim the IT security budget to the bone. Otherwise, cut with care!

Successful CIOs realize that the right way to go about setting up an IT security program is to start by realizing that you can’t protect everything to the same level and so you need to identify what IT assets are the most valuable to the company. Once you know this, you need to take the next step and estimate the likelihood that those assets might be lost.

Only after you have both of these pieces of information can a CIO have the IT team start to create security programs and put systems of controls in place to protect what needs to be protected. Although compliance programs are on everyone’s minds in these tough economic times, CIOs need to keep in mind that such programs are not always in line with security best practices.

Final Thoughts

If you want to have any hope of ever being a successful CIO, you’ve got to learn to be able to make the tough calls when it comes to funding corporate IT security programs. Although putting measures in place in order to make sure that the company remains complaint with regulations is good, it’s not nearly enough.

Taking the time to properly value your corporate IT assets and identifying what kinds of risks this data faces is the critical first step that too many CIOs skip over. Take the time to do this correctly and you’ll be well positioned to deal with poisonous snakes, sharp knives, and angry natives. Now if we could just find some way to deal with those pesky rampaging elephants…

What do you think should be a CIO’s #1 security concern: remaining in compliance or dealing with the security threat that comes from outside?

Click here to get automatic updates when The Accidental Successful CIO Blog is updated.

What We’ll Be Talking About Next Time

Ok all you CIOs wannabes, guess what one of your first problems is going to be once you assume control of the IT department? No, not that innovation thing. Nor will it be finding new ways to cut costs. Somewhat amazingly considering that we are living in the enlightened 21st Century — you will need to find more women…

http://www.theaccidentalsuccessfulcio.com/wp-admin/

Tags: , , , , , , , , , , , ,
Posted in security | 2 Comments »