Despite what you might believe, corporate bean counters were not put on this earth to shoot down your IT projects. But if you want the CFO to approve your proposal, you have to show how your technology investment is going to help the company move forward.
Angelo Tomasello is a former financial services CIO and currently director of healthcare solutions for Interactive Business Systems, a nationwide IT consulting firm headquartered in Oak Brook, IL. "It's my experience," he says, “that bean counters love to hear right out of the chute, 'I can save you X amount of money.' If you can save them any kind of money, I think they’re willing to listen.”
Due diligence is key. When you put forth a business case for an IT project, you need to cover all your bases. According to Tom Pisello, CEO and founder of Orlando, FL-based Alinean, a developer of ROI tools for information technology, any investment that requires executive approval outside the CIO's office—typically anything with a $50,000 price tag or higher—is going to need a complete ROI analysis. That means not only all the costs and projected benefits, but the risks as well. With major analyst firms like Gartner and Forrester Research indicating that about two-thirds of all IT projects are destined for failure, Pisello observed that “it’s pretty obvious that IT is a risky proposition compared to other investments the company makes.”
Here are strategies that won’t guarantee funding, but will definitely improve your chances for approval.
Use the right language for your business case
Make sure your financial metrics jibe with the way the accounting department likes to see project cost justifications:
- ROI calculations
- Net present value savings calculations
- Payback calculations
- Internal rate of return calculations
- Whichever measures your company uses
Also make sure that the finance people understand the terminology you’re using. “IT terminology can be very confusing,” noted Linda Hughes, a former CIO and now managing director of Atlanta, GA-based North Highland Company, a management and technology consulting company. “We use commonplace words and unusual definitions. It can totally derail a project before it even gets started if you’ve done a poor job communicating with finance about what the project is.” In other words, accounting might reject your idea out of hand because they think you’re submitting the same project that was rejected three years ago. But, in fact, you could be using the same words to describe something totally different.
Outline potential risks and responsibilities
Pisello also recommended that you work with the business unit that has requested the project and put together a risk analysis. What are the potential risks? What is the probability that those risks will occur? What effect will those risks have on the company should they occur? Who’s assigned to mitigate those risks and what strategies will be involved? “Pick the top 10 or 15 risks and document them as part of the project,” Pisello suggested.
It’s also key that the business unit stands up and stakes its P&L on the outcome. “A majority of the costs—the training costs and the business process reengineering costs—are going to come out of the business unit’s budget, not IT’s,”explained Pisello. “And almost all of the benefits are going to be the responsibility of the business unit, too—whether it’s improved productivity, improved selling effectiveness, or whatever. It’s all about user adoption and user application of the technology to the business.” So unless the business unit commits to achieving the goals, and builds its business plan around it, it’s not likely that finance will approve the expenditure.
Be conservative in your estimates
Hughes volunteered another important strategy in selling an IT proposal. “Never take all the savings when you do your calculations,” she shared. “If you think you’re going to have seven categories of savings out of a project, only put three or four of them in your business case numbers.” Holding back on soft savings, or ones based on industry statistics that may or may not be achievable, demonstrates to the accounting department that you’re being fiscally conservative in your projections. If those additional savings do occur, they’re gravy. But you’re not counting on them in justifying the value of the project.
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