When it comes to articulating the value of IT to corporate leadership, one size certainly does not fit all. IT leaders must continuously adapt their approach; especially when reporting to the head of finance.
The shifting sands of IT’s reporting structure
According to a 2018 CIO reporting structure survey, roughly half of US-based CIOs report to the CEO. Another 28% report to the CFO, while 17% report to the COO. The remainder fall under other miscellaneous functions.
Reporting to the CEO is perceived to be the holy grail of reporting structures as it’s a straight line to the top decision maker within the company. Moreover, CEOs who grant IT a seat at the executive table epitomize the importance of information technology to the company.
For many IT leaders, reporting to the chief financial officer isn’t always met with extreme levels of enthusiasm. In addition to being separated from the CEO by one degree, finance departments are often classified as cost centers rather than value drivers. Perhaps even worse for IT departments is that they may not enjoy first-class finance citizenship as felt in departments such as payroll or accounting. Like a distant cousin who’s down on his luck, the poor IT department crashes on finance’s couch until it can find its true home.
But are these stereotypes deserved? Afterall, finance proper also struggles with the cost center stigma, and must constantly demonstrate its value proposition; a feat which is nothing short of exhausting.
What’s really happening between IT and Finance
It’s been said that we fight with those we love. Perhaps a better rephrasing is that we fight with those who are most like ourselves. The point is that finance and IT aren’t all that different. Both groups yearn for a seat at the executive table. Both have to loudly tout wins to demonstrate value. And last but not least – both are crucial to the health of the enterprise. So what’s with all this disdain for IT reporting into finance?
Put simply: IT and finance bump heads because they aren’t speaking the same language.
A case in point is demonstrated via another commonality between IT and finance: both groups deal with seemingly insatiable demand which always exceeds supply. For IT, stakeholders want technology and various technological projects implemented at break-neck pace. For finance, everyone wants money. So how do we deal with balancing limited resources against unlimited demand? Metrics, of course.
Remember – everyone is tugging at the corporate purse strings and IT is just another source of demand. The way finance approves budgets is practically identical to how IT approves projects: through success measures. The one stark difference between the two teams’ approaches is the choice of words to communicate value.
Learning lingua financia
Unfortunately, CFO speak isn’t a romance language. The good news is that it isn’t rocket science and you don’t need an MBA from Harvard to become fluent. You do, however, need to convey IT demand and associated results in terms of financial gains.
In finance, it’s all about return on investment. It’s about raising revenue, cutting costs, or moving the bottom line in one way or another. Yet for some reason, we in IT often fail to articulate outcomes in terms the finance leaders can grasp. We erroneously speak complex technical jargon. We express vague results such as “efficiency” and “user experience.” Worst of all: IT leaders make CFOs work to understand the value IT brings to the table.
For CFO-led IT departments, it’s time to ditch the glitzy Powerpoints trumpeting CI/CD, cloud, agile. It’s time to divorce from vague promises of governance or reusability. When reporting to the CFO, both IT demand and IT value must be conveyed in dollars. And frankly, there’s no reason not to. If an IT leader is afraid to draw a straight line to dollars saved or earned, it may not be the right project afterall.
Adapt or stagnate
It’s not uncommon for a single CIO to report to two or three leaders in the span of five years. With each turn of the revolving door, the CIO must refactor her roadmaps to suit the current leader. It’s a painful process, but a necessary evil nonetheless.
When IT fails to become a signal of value within the noise of demand, budgets get cut. This creates a domino effect of lost credibility with stakeholders, staff churn, and general stagnation of IT products and services.
Like it or not, IT is in the business of selling promises and IT’s sales pitches are always customer dependent. Getting finance to understand IT value shouldn’t be a hurdle, but rather a standard operating procedure.