Finance and IT have been battling for control of technology strategy for decades, with no clear winner – and no love lost. Finance sees IT as paying too little attention to cost, IT perceives finance as paying too much attention to it, while each doubts the other's capacity for strategic thought. So they both waste time empire building and playing politics, when they could be working together to do what is best for the entire organisation.
'Finance and technology types tend to speak different languages,' says Bo Hofstead, a vice president with Agilsys, a US specialist in enterprise technology solutions, 'so neither side seems willing to listen or understand the other's concerns.' But their different priorities do not have to be an insurmountable barrier. 'The issue is not so much who should be responsible, but what they are responsible for,' suggests Martin Fahy, a lecturer in accounting and information systems at the National University of Ireland – though this can vary dramatically from country to country, industry to industry and company to company. Not all technology purchasing decisions have equal significance.
'Technology is not intrinsically strategic,' asserts Ian Taylor, a group principal with Forrester Research, so it is a mistake to view each and every purchase through the same lens. 'All organisations have some technology that can be viewed as a commodity,' he says; it needs to be efficient, reliable and as cheap as possible. 'Technology only becomes strategic if it offers some sort of competitive advantage and delivers real business benefits,' he asserts.
On this basis, finance would take the lead on very few technology-based purchasing decisions. 'If technology is a strategic resource, the CIO should report to the CEO,' suggests Taylor , 'if it is non-strategic, the CIO should report to whatever function IT services: if that is financial, then it's the CFO.' He sees little future for organisations where strategic technology decisions are sanctioned by the finance function.
'CFOs and FDs are responsible for keeping the rest of the board out of jail by managing compliance and financial reporting,' says Taylor , and keeping tight hold of the purse strings. But their preoccupation with costs can colour every decision they make. 'If you report to them you are a cost,' he adds, 'so if the CIO reports to the finance person, there is less innovation going on in the business.'
Fahy is more concerned about the tunnel vision of IT professionals. 'If the CIO owns technology then you get technology optimisation,' he warns, 'but what's optimal from a technology point of view isn't always optimal for business.'
IT people may also have a credibility problem. Debacles like the dot.com boom and bust and Y2K can make them seem flaky, by comparison with finance, who Fahy describes as having 'the clearer vision'. Companies are rightly wary of hugely expensive systems that do not deliver on their promises. As Hofstead comments: 'Too many companies have been saddled with underutilised systems as a result of past purchases.'
All of them agree, however, on how important it is for those responsible for technology strategy to tie it to business objectives, even if they disagree on how to best achieve it. 'A technology strategy is only effective if it is based on business strategy,' says Taylor, 'so it needs to provide competitive advantage or deliver business benefits such as increased earnings per share or market share.' As Fahy adds: 'If technology doesn't support shareholder value, don't invest in it. You need to consider factors such as whether it will increase turnover growth or working capital, or reduce working costs and risks.'
The skills required to make the sort of value judgement technology strategy requires aren't often found in one individual in finance, IT or anywhere else in an organisation. 'You need a mix of skills,' says Fahy, 'you must be comfortable with technology, understand the business issues, and frame the decision-making process with competing alternatives,' so other senior executives keep a watching brief. 'The trick is to put in place meaningful technology projects that address corporate objectives as well as pass strict financial scrutiny,' says Hofstead.
This can be easier said than done. In many business cultures, there is no particular relationship between the finance person, the technology person and the business people. But if an organisation wants to effectively marry technology strategy and operational strategy to deliver real business benefits then all three need to be able to interrelate well enough to share their perspectives and priorities.
'The most effective organisations are those with clear overall strategies that are consistently communicated,' says Hofstead, because this helps ensure that business goals are understood and embraced by each department. 'If the staff focus more on their differences than on common corporate objectives the dynamics between departments can easily become counterproductive,' he adds. Of course, in an ideal world, the focus would be on working towards clearly defined and understood corporate goals and achieving results that are good for the entire business – not building a bigger departmental empire and indulging in office politics.
