CFOs and IT: finding the right place.

• Author: Palmer, Ian
• Position: IT spending - Chief financial officers

When the economy takes a prolonged nosedive, financial executives not only have to decide if there's fat to be trimmed, but also where to trim it. As a result, technology budgets are sometimes slashed without much strategic forethought.

Woo Song, CFO, chairman and cofounder of Intrasphere Technologies, headquartered in New York and with international operations in London, says that while all organizations are struggling to strike the right balance among value, cost and risk with regards to strategic IT spending, most miss the mark.

"People understand and want to be strategic in IT spending," says Song, whose company designs and builds applications for large enterprises with numerous systems and platforms. "But I find few who are really strategic. The key to striking the right balance is to understand that technology plays a supporting role for most companies."

An experienced entrepreneur and a recognized leader in the IT industry, Song believes financial executives should regard IT projects more like investments and less like expenses. But others say CFOs, far from being technophobes, simply need the ROI clearly and convincingly explained before they are willing to spend.

With good reason: IT spending accounts for a significant portion of corporate budgets. Some reports suggest that some 50 percent of capital spending goes towards software, hardware and services. Clearly, it behooves financial executives to require chief information officers (CIOs) to explain not only how the technology works, but also how it will benefit the company.

Anemic economic growth, heightened by the lingering impact of September 11, is one of the factors contributing to cautious IT investments. But, recent economic forecasts suggest a turnaround in corporate spending on IT is imminent. The Aberdeen Group, for instance, says worldwide spending on IT products and services could increase 4 percent in 2003, with long-term growth in the 4 percent to 5 percent range. Technology-related purchases in the U.S., it adds, will increase 3.6 percent this year, with annual increases between 5 percent and 6 percent from 2004-2006.

Additionally, In-Stat/MDR projects that, by 2006, U.S. enterprises will spend close to $256 billion on IT, up from about $225 billion in 2002. IDC, furthermore, says global revenue for IT software, hardware and services will grow 26 percent by 2007, rising to a combined $1.1 trillion.

Meanwhile, Canaccord Capital, an investment dealer based in Vancouver, British Columbia, issued a report showing that 49 percent of the 90 senior IT managers polled believe IT...