Recently, I was asked to present to a group of CIOs on “How to make your CFO your best friend”. Such a subject can be a hair-raising experience for most seasoned players, as it requires a strong financial background and understanding of the business to put across acceptable metrics and KPIs for the management team. This is where a skilled CIO can get budgets approved without the proverbial scissor’s side effects — it’s possible to avoid typical across the board budget slashes (of, say 20%), especially on the operational side of things.

Long time back, I decided to separate the operational budget and the investment (read capital expense) budget. My intention was to let the business decide the projects that they wanted to invest in. This ensured that business created the P&L for their projects.

Obviously, IT had to help the business with the figures and merits of each solution. In most cases, business would choose the best possible solution and succeed in justifying them to the CFO and CEO. This shift signifies that we will help implement and execute the project from an IT perspective, but you (business) own it. Many cases required the creation of innovative KPIs rather than the conventional ROI or IRR models to help the business justify its investments.

While setting the operational budget is relatively easy, the expectation to reduce budgets year on year remains an interesting discussion. In one of the cases, I took a menu card approach to operating expenses. If you want good speed of response from your network, you have to pay higher, like a toll paid to travel faster. Hardware refresh can be analogous to replacing cars every five years, a common corporate practice. Why? Mainly since the cost of maintenance goes up, and availability of spare parts is also an issue.

It’s possible to have the CFO as an ally, if the CIO understands the compulsions and metrics that the CFO has to manage. After all, CIOs are also responsible for managing the cash flow and acting as conscience keepers for the company.