It's not often that Wall Street financial analysts hear from a CIO. But that doesn't mean they aren't interested in what's going on inside a CIO's department.
MORE ON CIO.com
Does Your Work in IT Matter to Wall Street?
How TJX Avoided Wall Street's Wrath
"When we value a company, the value is based a lot on earnings potential," says Bonnie Chan, a securities analyst at Dreman Value Management who covers financial services. "And an IT implementation can increase earnings potential." Or, conversely, it can take away from a company's value if financial analysts don't see a clear link between an IT project and a financial return, Chan says.
One way for companies to appease analysts is to provide clear time lines and expected returns to the financial community on massive IT projects. So a company could say, "In the next three years, we will invest X amount of money in IT and save $100 million," Chan says. "We would love time lines like that."
Though Chan claims no expertise in IT, she's well aware of the difficulties involved in IT implementations and systems integration. "There's so much that can go wrong integrating multiple systems that can affect, say, sales," Chan says. "We know that things can blow up."
Red flags pop up when, for example, management offers analysts vague time lines of when the company expects to start or finish integrating systems in a merger or acquisition, Chan says. "If we have a sense that a time line is delayed, that's certainly a red flag," she says. "And we'll have to ask more questions."
Chan says that IT initiatives that have close proximity to the end customer will always be more scrutinized than other types of company programs "because these are the instances where long-term damage, such as customer dissatisfaction, can be done if things don't go according to plan."
Lastly, Chan says if a CIO does have to speak on a quarterly conference call, leave the IT-speak back in the shop. "It can be sometimes hard for [CIOs] to be articulate," she says, "and for the audience to understand what they are saying."
Next read this:
- 7 traits that separate IT leaders from IT managers
- 6 business concepts IT leaders should master
- Tech takes on its racist terminology
- 10 most misused buzzwords in IT
- 9 IT resolutions for 2021
- Top 8 challenges IT leaders will face in 2021
- Top 5 strategic priorities for IT leaders in 2021
- 11 old-school IT principles that still rule
- CIO resumes: 6 best practices and 7 strong examples
- 13 'best practices' IT should avoid at all costs
- 10 future trends and how CIOs can keep ahead in 2021