The first article I ever wrote for CIO magazine, way back in 1999, was about “demonstrating IT value.” How, I asked our readership, can CIOs change the conversation about IT from one of cost to one of value?
While CIOs have come a long way in providing value to their companies, the “cost to value” conversational shift is still a goal for many CIOs.
The Simple Solution
Gerri Martin-Flickinger, CIO of Adobe, has worked hard to change the conversation about IT in her company. To her, the first order of business was to educate her business peers on the different roles that IT plays. “My business leaders don’t spend a lot of time thinking about IT legacy debt,” Martin-Flickinger says. “So, I work very hard to separate for them what is legacy and what is strategic. To me, that is what a good CIO does.”
A few years ago, Martin-Flickinger had a revelation: “We were using all of these complex financial models to report on how we were spending our IT dollars,” she says. “But the model was too complicated to tell the right story.” In particular, Martin-Flickinger was finding that her executive peers glossed over the role that depreciation plays in the IT budget.
“I had to get my business partners to realize that the projects we do today have a large capitalized component that will show up as operations expenses for the next five years,” she says. “Those costs can stack up like stair steps: a little money this year, and a little money next year. If you don’t keep an eye on depreciation, it can over take the rest of your OPEX budget very rapidly.”
Martin-Flickinger realized that, as with so many things in IT, simplest was best. While she continued to use complex financial models to determine IT spend, she changed the presentation of those numbers to something very simple. “I started using a pie chart that had only three sections: operations, new delivery, and depreciation.” The dashboard was concise and clearly illustrated the impact that IT had on the business. “This made a major difference with my CEO,” say Martin-Flickinger.
Once she started putting the pie chart on every dashboard and report she gave to the executive committee, Martin-Flickinger noticed a change. “Every time I went in to talk to the executives, I brought that pie chart with me. I found that the dialogue changed to focus on the three parts of the budget.”
Thanks to the pie chart, Adobe’s executive team now understands the costs of IT, the value of IT, and the role that depreciation plays. “The pie chart solution sounds so simple,” says Martin-Flickinger. “But for me, it was the secret sauce in focusing our executives on how we are spending our IT budget.”
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