Influencing the CFO can be a challenging yet necessary task for IT leaders, especially in the threat of recession. During difficult economic times, the CIO and CFO roles appear to clash in terms of spending practices. The CIO is expected to come up with IT solutions to save the company money. The CFO is expecting each department, including IT, to reduce budgets. By working with the CFO and understanding their perspective, IT leaders can help balance direct spending cuts with investments to reduce costs elsewhere. Learn how to influence your CFO and save IT's budget from recessionary cuts.


How Can IT Influence the CFO?

Although the CIO and CFO might be seen as adversaries, both typically have the best interests of the company in mind. By working collaboratively, the CFO can understand how to use IT solutions as a recessionary defense. Focus CFO discussions on the value of current IT services and the value of investments. Collaborate to prioritize spending based on overall financial objectives of the company.


Why Should IT Influence the CFO?

When an IT leader is viewed as a source of information or a confidant to the CFO, they can influence decisions. A best practice to this approach is to communicate the value in IT's day-to-day operations. Bearing that in mind, consider the following reasons why IT leaders will want to have some influence over the company's CFO.

* To validate IT's budget. Influence how the CFO views IT spending by linking it to the services IT provides and the value those services contribute to the company. Help the CFO to understand the relationship between budgetary measures and service levels by shifting the discussion to one of business tradeoff decisions versus simple budget reduction.

* To show IT investments can result in business savings. Keep in mind the mantra that there are no IT projects, only business projects. Justifying the value of a project is a joint responsibility between business and IT, particularly during difficult economic times. Focus on a hard ROI when communicating value or urgency to a CFO in order to push the most pertinent projects forward.

* To hasten approval on projects and major initiatives. When there are clear business objectives and a solid business case, the most important projects will not only be pushed forward, but will be approved quickly.


Understanding the CFO

When looking to influence the CFO, it is important to better understand their role, how it may change during a downturn, and how IT can support CFO decision-making. IT leaders should ask themselves the following questions to judge how they can relate to the CFO:

* What are the CFO's main responsibilities? The CFO is accountable for understanding, reporting, and forecasting the financial health of the enterprise. The CFO manages financial records, reports, risks, and plans. They oversee spending and budgets across business units. They typically report to the President or CEO of a company.

* What will be asked of the CFO during a downturn? During a tough economy, the CFO will be asked to find ways to reduce costs. They will look for the least value added expenditures and initiatives that can be delayed across all department budgets. IT leaders can assist the CFO to prioritize initiatives and recognize how cuts could affect other business units.

* What is the CFO asking of other executives? The CFO will be asking all executives to find ways to save money. While IT may become a target, IT leaders that have a good understanding of the day-to-day operations within the business can volunteer expertise and ensure money is not taken out of the wrong initiatives.


Recommendations

Once there is a good understanding of the CFO's role, look into how to use this information to highlight the benefits of IT. Consider how IT leaders can become a credible partner in responding to challenging financial conditions.

1. Know the ABCs of the financial alphabet. To really communicate with the CFO, learn the financial considerations that drive and influence their decisions. If time has been taken to lay out IT's actions and project plans from a sound financial perspective, it will aid in fostering a credible relationship. When financial tradeoff decisions are supported with solid justification, IT will become a trusted partner in responding to cost pressures. For more information on management accounting, refer to the following McLean Report research notes, "Income Statements: The Crystal Ball of Vendor Viability and "Spotting Balance Sheet Red Flags.

2. Show IT's impact on the organization as a whole. Many times IT gets so caught up in day-to-day technical operations and the technical merits of projects, that its importance to the business can be lost. Link IT's day-to-day activities to business operations. IT projects should be linked to business objectives. A CFO may care less for the technical merits of a project for installing VPN. Rather they will find it important that employees can now work from home and reduce the need for office space and its associated costs. Focus on the business value and need when justifying projects and activities.

3. Include quantitative metrics. Do the analysis to show how new initiatives significantly impact the bottom line to make the CFO's decision easy. For more information on measuring IT projects and initiatives refer to the McLean Report research note, "Measure the Impossible in the IT Department.

4. Align IT budgets to business priorities. Get on the same timeline and priority list as the business leaders in the organization. Consult with them to squeeze the most out of IT's operations and project budgets. By showing how IT costs are contributing to business objectives, budgetary decisions are made based on the merit of the value added back to the business.

5. Involve associated business units. Ultimately, IT cannot make the final decision to defer or cancel projects. Go to the business units that own each initiative and work with business sponsors to understand the impact of suspending or terminating initiatives. The business case and impact analysis should be owned by the business, even if facilitated by IT. Help make business units an advocate in the decision-making process. Deliver recommendations to the CFO after exploring options with business units.

6. Provide options and always show the tradeoffs. Avoid coming to the CFO with a go or no-go decision. Give them alternatives from which to choose. Most importantly, show the tradeoffs. Focus the CFO's decision on the relative merits and risks of each option. Help them to make a decision based on criteria other than just cost.

7. Close the loop. When a project is complete, validate immediate impact, expected long-term benefits, and compare them to the initial business case. Follow up with your CFO and show them that the decision they made resulted in contribution to the bottom line. For help in completing a project post mortem, use the McLean Report "Project Post Mortem Template.


Bottom Line

IT constantly struggles to prove its value within an organization. In an economic downturn where budgets are being cut and CFOs are looking for cost savings, IT becomes a major target. When faced with this situation follow Info-Tech's approach to influence the CFO as a champion for IT budgets.