IS Alignment and Financial Concerns

22 Nov

In a recent post, d112221671 discussed the effect that the current economy has had on IS alignment, and alignment in general. In this post, I plan on examining the role of finance in IS alignment not just from an economic standing point but from an internal one as well.

This late in our investigation, the role of the CIO has been discussed on a number of occasions. For example, aidancrowley7 discussed the role of CIO the post “The Importance of Alignment and the Changing Role of the CIO”. More recently, posters have become concerned with the role of the CFO in relation to the CIO. In a paper published by The Center for Digital Strategies, entitled “Fuelling Business Strategy through IT/Finance Alignment” alignment in IT and IS is approached from a financial stance, and the role of the CFO in alignment is discussed.

The paper suggests that there is a lack of communication and business understanding in IT, and as a result it is creating a large roadblock towards realizing IT value. It attributes this to a lack of alignment to a clash of interests between the CIO and the CFO. This misalignment is something that a lot of us have already discussed. The paper makes a suggestion that the CIO and CFO should world together to determine optimal IT investment based on various measures of value.

In relation to alignment, finance plays a crucial role. Without agreeable methods on which to base IT investment, the “best fit” that many of us have referred to cannot be achieved. This issue of internal disagreement may in fact be a huge roadblock for IS alignment. If neither can agree which is the best way to measure the value of potential investments in IS, than they will never find a way to align their interests.

The paper does suggest that there should be some form of compromise on either side. For example, it advises CIOs to “try to think, and even act, like CFOs, because their investments are so inextricably linked with the company’s financial health”. It’s a compromise that can come with a lot of scrutiny, because such a method of thinking about IS can lead to certain factors, such as system integrity, being over looked in favour of a more tangible return on investment.

Personally, I think that there is a fine line between competent financial investment, and compromising IS consistency. When it comes to IT, and IS, one of the most important things to note is that even the little details matter. For example, just a few small cuts can lead to system inefficiency, which can be a lot more trouble than it’s worth, especially if it’s only cause is a need to reduce capital expenditure. Then again, in an economy like this one, learning to adapt to financial constraints can be extremely important.

Does anybody else have any opinions on this?

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3 Responses to “IS Alignment and Financial Concerns”

  1. pm1083 November 22, 2012 at 9:34 pm #

    I definitely see how the two of them are very closely linked.Seeing as IT makes up so much of a companies budget these days it’s more important than ever to not overspend on any IT projects unless there is definitely value to be gained from it.

    • cob12 November 26, 2012 at 12:45 pm #

      Thanks for commenting, pm1083. That’s a great point about the high proportion of companies’ expenses being comprised of IT related items.

      Do you think that there is room for more money to be spent in an economy like this, especially if it could lead to a lot of savings own the road? Or do you think that it might be too heavy an expense to make in a tough climate?

    • cob12 November 26, 2012 at 1:30 pm #

      Thanks for commenting pm1083.

      That’s a great point about IT projects making up a high proportion of companies’ budgets. Do you think that IT spending shoud be increased in times like these, since they have so many financial benefits down the road?

      Or do you think that expenses that large are best left to the side, since the rewards aren’t instantaneous?

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