How it worked then
Ten years ago, you could assume that the chief information officer would report to the chief financial officer. More often than not, a company’s board would develop a strategy that included an outline for the flow of information. Together with the CFO, members of the board would then decide on a budget for the IT department, with some input from the CIO, in order to make sure that the budget and plan were realistic. The CIO then spent his or her budget, and as long as the standard for information flow was met, no one complained. Support for daily operations, rather than value and revenue, were the major concerns of the IT department.
IT critical to business growth
But that was ten years ago, and today’s business models rely on cutting-edge IT solutions to improve customer service, streamline processes and improve profit margin. Technology is increasingly seen as a vital component in daily business operations, not just merely as a way to transfer data. IT solutions provide the gateway to gain business and increase revenue, thereby furthering the long-term company goals. CIOs have moved from being line managers to important individuals in the C-Suite.
The increasing importance of IT in business necessitates that companies revise their IT accountability structure. According to CIO Magazine in 2008, 41% of surveyed CIOs reported directly to the CEO, rather than the CFO. In fact, according to their State of the CIO ’08, more CIOs report to CEOs than to any other top executive.
Companies are also altering the job description of their CIOs and CFOs. Smart boards of directors are employing CIOs with proven financial experience, or hiring CFOs with IT experience. For example, Intel’s CFO, Stacy Smith, was once a CIO within the organization.
A smarter decision making process
While IT and related services are now more integral and influential than ever, the current economic reality does not allow for what one may consider to be a reflective increase in capital. Today’s IT decisions are based on value and revenue, rather than innovation. Revenue improvements will not come from sitting back and maintaining the status quo. CIOs and CFOs that want to survive the current economy need to push the limits of what they can do with the budget they create.
So who makes the decision? The truth is that it’s not about title. Good decision making is, and has always been, about understanding the current needs of an organization. Good decisions about IT resources are based on:
True ROI is not as simple as looking at money in, money out. Other factors, such as transition time, project growth, and productivity all affect overall return. By looking beyond the “low ball quote,” effective decision makers find partners that drive revenue and increase value. Solid investments in offshore partners will always increase ROI, even if they require a little more capital at the outset.
- The vision for the company’s future
Good decisions come from understanding not only what a company needs today, but what will be needed for tomorrow. In today’s marketplace, decision makers are presented with an excellent opportunity to find creative ways to use IT as a tool to support business processes for years to come. Partnering with companies that can meet needs in both the short and long-term is key.
- Interdependencies of the business model and processes
Effective business IT solutions align internal processes with the entirety of the company’s proposed business model. By making bold decisions to increase infrastructure productivity with effective technology, progressive executives improve offerings and drive sales. The right IT solution or offshore partner must provide solutions that fit seamlessly into existing business practices with minimal disruption to operations.
- Working smarter, not harder
Decision makers must look outside the box for creative solutions. This is one reason that XaaS and outsourcing solutions are gaining popularity. These services allow businesses to consolidate their local IT departments and focus them on goal-oriented strategies, rather than the day-to-day maintenance of IT details. It also allows companies to shift initial capital expenditures and long-term maintenance costs and responsibilities to someone else, drastically increasing the value of provided services.
The truth is that tighter IT integration and budgetary constraints have forced the blurring of job roles. Titles are not critical when making good decisions about outsourcing—solid IT business decisions are made when decision makers take the time to understand their needs and find an outsource partner who can work with them today and tomorrow.
“A Practical Guide for Turning a Move Toward Outsourcing into A Self-Improvement Plan – Part 2”