Managing IT as a business: Gartner, Inc. predicts that through 2007, 65 percent of enterprises will grossly mismanage complexity and risk, stifling productivity and earnings, and inflating costs by at least 25 percent.

• Author: Lutchen, Mark D.
• Position: ROI of IT

Information technology (IT) continues to be one of the least understood and most mismanaged areas of many businesses, even though it is one of a company's top five expenditures. Inability to meld IT organizations, systems and technology, and to directly link these to a company's strategic business drivers to produce results is one of the major reasons why large, complex mergers or acquisitions often fail to deliver on their promised synergies.

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Additionally, in today's regulatory environment, CFOs must pay close attention to the return on investment (ROI) of IT expenditures since they are personally accountable for accurate financial controls in their organizations--including IT financial controls.

Specifically, CFOs must be concerned about Sarbanes-Oxley compliance. Organizations not only need to support increased controls around the flow of financial information to their quarterly statements, as well as who does, and doesn't, have access to this critical data--but they also need to have controls around large-spend areas, like IT. If a costly IT project goes astray, like an enterprise resource planning (ERP) implementation or an extranet build-out, this can clearly hurt an organization's bottom line. This can be problematic for the CFO who must attest to the controls in place that should help prevent a large implementation blunder.

Identifying the Real Problem

How can CFOs ensure IT and business strategies are aligned? What can a CFO do to support IT during these times of Sarbanes-Oxley compliance and minimize IT-related business risks? By requiring the IT organization to operate like other business units and drive three business imperatives into the organization:

* Understand the real IT spend. Many companies simply do not know in any sort of detail or with accuracy what IT assets they own, where those assets reside and how much it costs to fund them on an ongoing basis. IT assets can include hardware, software, networks, services and people.

* Accurately measure IT performance and business value. In addition to the typical operational metrics, IT metrics need to be value-focused, performance-based and improvement-oriented.

* Focus on leveraging investment cycles and the power of standardization across the enterprise. This entails driving significant costs out and economies and efficiencies in. CFOs must champion working closely with their chief information officers (CIOs) to make these strategies a reality. Only...