Moving the Dial Toward Discretionary Funding

Of Gary Curtis’s more than three decades as a management consultant, he spent several years running Accenture’s Global CIO Council, a private network of top CIOs, as well as directing the firm’s CIO-focused research program.  As such, Gary has a “panoramic” view of the CIO role.   I asked Gary to provide some insights into what all CIOs should be focusing on now.  

What is the most critical issue currently facing CIOs?  

Except maybe in new companies like Google, the greatest challenge for CIOs is moving the needle on IT spend from non-discretionary investments toward discretionary investments.  CIOs need to find the money to help the business develop new products, new services, more efficient processes, and the ability to turn data into profit.    When you are working in an environment of constant and unrelenting demand, and when the business leadership says to IT, “You’ve got to do more for less,” your most powerful option is to shift the spend.

Why can’t discretionary funding come out of cost reductions in infrastructure?

Most CIOs have already taken major steps in reducing the non-discretionary piece of their spend.   In fact, they’ve already been so effective in using strategies like global sourcing and virtualization to cut IT costs that the big money is usually off the table.  There typically isn’t much left to be squeezed out of the non-discretionary part of the IT budget.

This means that IT has to get better at competing for discretionary money.  No one is going to walk in and say, “Guess what!  Here’s more funding for you!”   This poses a major challenge for CIOs.  Companies have a limited set of bets they can make with their money, and there is a lot of competition for those bets: marketing, product development, and R&D all want piece of that pie. 

To make matters more challenging, IT can be at a disadvantage when competing for funds.  Some executives believe that projects that have a large IT component cost more, take longer, and sometimes fail.   When IT has inherited (or earned) a reputation for failure, IT investments receive enormous scrutiny.  I would say this is even more so today than in the past.  

What are the critical success factors for creating an environment of discretionary funding in IT?

Believable business cases: In the absence of more money, CIOs have to work with their business partners to come up with a plan for discretionary investing that the business will support.   The best way to compete for limited funding is with a believable business case, including clear accountability for the forecast results.

Track record for delivery:  Any new CIO will need to get some meaningful wins on the table as soon as possible.  A track record of good delivery is only tablestakes for competing for funding.

Smaller projects:  The business will be more likely to invest in smaller, digestible chunks than in one big, long-term project.  As CIO, you will have more control over smaller projects, because you can see what’s not working and make adjustments quickly.  Run discretionary projects so that they have check points where you can determine if the solution is going to deliver on the business value that you and your business partners intended.

Value in the first six months:   CIOs need to be sure that the project delivers value as early as possible, not only when the entire project is complete.  This point is rooted in the ERP wave of the last decade. Those ERPs were massive projects that took years, and the business did not see any value for a long time.  During the three or more years of implementation, the business often changed direction, but the change didn’t get worked into the design of the mega project.   Three years is way too long for a project to deliver initial value.  These days, a project should deliver real business benefits in the first six months. In a fast moving business like securities trading, two to four weeks is about as long as long as the business can wait.

Great project leadership:  This one is probably the toughest of all:  Have the right talent in the IT shop with sufficient experience and leadership at the project level.  Really talented IT people have more options than ever before, and those options will continue to expand, so remember that the project team doesn’t need to be wholly owned by the IT function. Today, if you look inside any major IT shop and see how things are done on a daily basis, only some people are actual employees.   When you have a relationship with a vendor, where you both have the willingness and commitment to do what’s needed together to get the job done, you can staff your projects for success.

Incentive-based vendor partnerships. Don’t let the lawyers negotiate the vendor deal to death.  The best vendor partnerships have a healthy risk/reward structure, so that everyone is invested in a successful outcome. The world is creating pressures on everyone to do things more efficiently and at lower cost. That means that the CIO needs partners who are incented to find ways to work more efficiently over time.

About Gary Curtis

Gary is a globally recognized senior Information Technology expert and consultant, now in private practice advising Boards and senior executive teams on improving the business value and controlling the risks of information technology.

For the past thirty years Gary has built and led major IT Strategy consulting practices and served large enterprise clients around the world.  Most recently as Accenture’s Chief Technology Strategist and Global Managing Director of the firm’s Technology Consulting business, Gary has helped many CIOs through large-scale transformations and worked with them to improve the business effectiveness of their IT functions.

Before Accenture Gary was a Senior Vice President with The Boston Consulting Group, where he was responsible for the creation of the firm’s global IT Strategy practice and its leadership for many years.

Even longer ago Gary led large-scale application development projects for many of the world’s largest financial institutions and companies in other industries.

Gary has a degree in physics from the University of Chicago and serves on the advisory boards of several young companies which are developing new technologies.  When not on the world’s airlines, he lives in the San Francisco Bay Area.