Gartner Research

Flipping IT Financial Thinking to Prepare For Digital Business

Published: 02 February 2015

ID: G00274119

Analyst(s): Patrick Meehan , Kurt Potter

Summary

The global financial crisis and ensuing economic uncertainty have shifted CIOs’ focus from innovation to optimization. To drive digital business discovery and growth, CIOs must establish a new relationship with financial risk and uncertainty. They must “flip” their mindset to dynamic IT financial thinking.

Table Of Contents
  • Key Question
  • Opportunities and Challenges
  • How this report will help

Foreword

Executive Summary

  • Digital leadership is tied to flipping financial thinking
  • Flip from risk-based to uncertainty- and faith-based portfolios
  • Flip to “every business unit is a technology startup”
  • Flip prioritization to emphasize startup and venture capital funding
  • Flip roles to include leading digital business investment
  • Flip to “every enterprise is a technology company”

Digital leadership is tied to flipping financial thinking

  • CIOs and their enterprises have forgotten how to innovate and manage finances
  • CIOs must drive digital business by leading the activation of renewed innovation and increased financial maturity
  • CIOs must maintain a financial response to digital business uncertainty (equally useful for other big change)
  • CIOs should evaluate existing risk- and uncertainty-based business models to drive improved financial performance

Flip from risk-based to uncertainty- and faith-based portfolios

  • Flip strategic spending to fear/fact/faith-based portfolios
  • CIOs must not throw away ROI-based investment decisions, but recognize that all investments and value are not equal
  • Understand the basic definitions of risk and uncertainty
  • CIOs should lead regarding uncertainty to improve their “to be determined” future state
  • CIOs should prioritize and shape risk- and uncertainty-based investments
  • Flip from cost minimization to balanced portfolios

Flip to “every business unit is a technology startup”

  • CIOs should no longer view shadow IT as an enemy of the enterprise

Flip prioritization to emphasize startup and venture capital funding

  • CIOs must build a funding pool for startup and venture capital endeavors
  • CIOs with advanced aspirations or uncertainty should consider competitor joint ventures to fund startups
  • Government CIOs should consider creative venture capital funding even if it is foreign to the mission
  • CIOs should experiment with startup and venture capital funding concepts to generate excitement for digital business

Flip roles to include leading digital business investment

  • CIOs and stakeholders should consider creative treatment of funding and digital business leadership roles
  • CIOs and stakeholders should consider adding new roles in the business and within IT to drive digital business legitimacy and commitment
  • Flip the role of CIO to chief investment officer
  • CIOs should combine new roles with new value metrics, to drive dynamic value communication for digital business
  • CIOs should consider replacing command-and-control budgeting with new value metrics

Flip to “every enterprise is a technology company”

  • CIOs and stakeholders should consider the financial issues and imperatives of technology companies
  • CIOs and stakeholders can use an analyst’s view of the financial implications of becoming a technology company

Conclusion: Help manage unlimited digital business demand with better financial management

  • Convert uncertainty into risk
  • Use better financial acumen within the IT organization as insurance against future digital business course corrections
  • Beware of the creative side of digital business, which makes every employee an eager system designer

Appendix: Case Studies

  • The City of Las Vegas uses dynamic stakeholder communication to confront uncertainty and drive transformation
  • Freddie Mac invests in IT transformation to enable the rest of the business
  • What CIOs must know about investment uncertainty when every enterprise is a technology company

Further Reading

  • Related content
  • Gartner Executive Programs reports
  • Core research

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