Business executives from a group of financial services firms recently shared a basic idea about how CIOs can deliver returns on IT projects: For starters, they said, IT managers have to be able to read an income statement.
“Do you know where the revenue comes from? Do you know where expenses are generated? And do you understand you have to have more of the first and less of the second?” asked George Fisher, executive vice-president and chief administrative officer at New York-based Prudential Securities Inc.
Fisher and three other executives participated in a panel discussion about what they want to get from their IT departments, as part of the National Investment Company Service Association’s annual technology conference in Boston.
Most of the panelists said IT managers are expected to be an integral part of their business operations and, as such, should be as well versed in business plans as they are in technology.
“When you have your major technology folks…able to discuss in great detail and very accurately describe, define and discuss what the business challenges are to doing something, then you know you’re beginning to blend your organization,” said William Bridy, a senior director at New York-based Merrill Lynch Financial Data Services Inc.
Bridy and other participants also said they have bid farewell to the practice of funding long-term IT projects. Now they expect quarterly progress reports on projects and want to see tangible returns on investment in a maximum of 18 months.
“We want to have functionality delivered as needed,” Bridy said. “If it’s a longer-term initiative, let’s break it down into manageable, controllable and discrete chunks.”
Fisher said he advocates that most IT projects should pay for themselves within a year. “A lot of people put out multiyear projects, and then a couple of years later, nobody knocks on their door and asks them, ‘Did it work?’ ” he noted.
On the other hand, Bridy said he has found that most IT problems or project failures can be traced back to business users not clearly defining their goals. But neither he nor the other panelists discussed that issue further.