IT Financial Management Association (ITFMA) Conference

Guest blog entry by Randy Leiser, CFO in Residence

Two weeks ago I attended and presented at the IT Financial Management Association (ITFMA) Conference in San Antonio, Texas. The conference targeted IT CFO's and financial managers and covered a broad range of IT financial management subjects. As Planview's visiting finance expert, I presented "A Strategic Approach to IT Financial Management" — using the discipline of portfolio management to financially plan and manage resources along a hierarchy of the enterprise's strategic plan.

Based on the feedback I got after making my presentation, I think everyone in the room understood the concept and were generally in agreement with the reasons to implement IT Strategic Financial Management. That said, I sensed from a few of the post-presentation conversations I had with a few of the attendees that there were concerns about perceived resistance to the concept they expected to face back at their own companies.

A prerequisite to establishing strategic financial management is articulating the enterprise's strategic plan. As I covered in my blog earlier this month, "It's a Jigsaw Puzzle — Connecting the Pieces of Your Strategic Plan", assembling an enterprise's strategic plan is not accomplished in one big step but in a series of coordinated smaller steps, using an organized and controlled effort. Using a business management application that can frame the strategic plan, as well as assist in the inventorying, sorting and connecting of the strategic plan efforts, provides that organized and controlled framework.

Similarly, strategic financial management is best achieved using organized and controlled steps. An enterprise business management application designed specifically with a strategic hierarchy as its foundation will provide the structural support and control to guide and coordinate the incremental steps to incrementally adopt a strategic financial management approach.

So with all that said, how does a company begin the adoption of strategic financial management? While there are many planning and adoption considerations, I think it is fair to say that it begins with getting CXO's to understand the value to the enterprise of establishing strategic financial management. Getting senior management support can be best achieved by making both an implicit visionary and a more explicit tangible value case.

I make the argument for the more implicit or visionary value case by explaining that enterprise value is maximized through market leadership, and that market leadership is achieved through successful, strategically-aligned innovation. I have added to that the argument that obstructions to successfully achieving strategic alignment can be mitigated through the adoption of strategic financial management. These types of obstructions and the degree in which they impede strategically-aligned innovation are dependent upon the unique characteristics of the enterprise, but they include the ability of the enterprise to:

• Focus on and coordinate the core strategy;
• select the right efforts in which to apply resources; and
• manage the selected efforts to a successful completion

There are compelling general industry survey statistics that further support these as inhibitors to strategic alignment, but I have found that most enterprise's can find their own specific examples where practicing strategic financial management would have resulted in a much more favorable outcome. Some situations, like allowing an out-of-control or strategically-misaligned project continue too long, may be financially significant.

From a more tangible perspective, there are the immediate practical benefits that come with adopting a strategic approach to financial management, including being able to more efficiently plan and manage enterprise resource capacities and demands. In fact, this is where many companies begin their adoption of what will ultimately become a more comprehensive strategic financial management approach. Establishing the management processes along with a supporting business management tool to address this immediate need also provides a foundation for eventually aligning these resource capacities and demands with the enterprise's strategic plans. The near-term tangible benefits achieved through efficient resource management supports the longer-term, visionary argument for adopting strategic financial management.

With senior level support established to make the investment in new management processes and a supporting business management application tool, incremental organized and controlled steps can then be taken to build-out an enterprise's strategic financial management approach. As noted earlier, implementing strategic financial management is not accomplished in one big step but in a series of smaller coordinated steps — it will evolve and take further shape over time just like the construction of a building. Like a building's steel infrastructure, having an enterprise business management application tool designed specifically for strategic financial management will provide the structure to guide and support the build-out as your enterprise adopts strategic financial management.