Many CIOs become frustrated with the process of receiving approval for IT projects. They’ve done the research and presented the proposal with financial data. Still, the Board delays a decision. Part of the problem may be in how IT and C-suite executives make decisions. They both may follow the seven-step process, but each group looks at those steps a little differently. If CIOs want to ensure approval, they need to look at the process from the Board’s perspective.
How you phrase the decision can have a huge impact on how the C-suite executives view the IT investment. For a long time, IT investments were viewed as a necessary expense. They were not viewed as a strategic spend. Today, IT is becoming more strategic to a company’s success, often being the catalyst for growth. Technology is needed to enable employees to work efficiently and effectively and to ensure competitive use of business data.
For example, a company is concerned its cybersecurity is insufficient now that it’s moved to the cloud. IT is tasked with recommending how to harden the security framework. CIOs that present features, functions, and price may find that their recommendation is declined or tabled because the board isn’t convinced that the proposed solutions address the concerns adequately.
The executives aren’t interested in a price sheet of possible solutions. They want to understand how the proposed items are going to protect the company’s digital assets. Phrasing the request in terms of a business strategy raises a different set of questions.
- What is IT’s cybersecurity strategy?
- How does it align with the business strategy?
- What are the benefits of the proposal?
- What are the risks?
- What resources are needed?
Answering these questions frames the details in ways that speak to the executives’ decision-making process.
CIOs still need to collect pertinent information on a proposed solution. No Board is going to approve an investment without data to back it up. Part of that information has to include the costs associated with the solution. Not just the upfront costs but also what is the return on investment (ROI) and the breakeven point. How will the recommended solution impact the bottom line?
Data comes in many forms. It doesn’t have to be numbers, percentages, or graphs. Customer testimonials can have a significant impact on a Board. If a peer company has used the solution with positive results, include the case study. Even providing data on how similar projects performed can have an impact on how a proposal is viewed. Talk to vendors or consultants for possible case studies or testimonials.
Breaking the project into components may be a better presentation approach. If the proposed project is multi-phased, viewing it in smaller increments makes it less overwhelming. It also shows the Board the impact of the project over time. When separating parts, make sure to tie them to the business strategy as well as the technology.
Look at options
Even if the task is to provide a recommendation, CIOs still need to include alternative solutions in their presentation. Executives want to know that the evaluation is not biased. Three to five alternatives indicate a considered approach to the problem. Detailed analysis of each option does not need to be a part of the presentation; however, data should be available should questions arise. Both quantitative and qualitative assessments may be needed to give a full picture to the Board.
If CIOs arrive at three options, each one needs to be evaluated with the same level of rigor. However, the details of the two eliminated options do not need to be included in the presentation at the same level as the recommended one. For example, automated monitoring tools are part of the proposed solution. The preferred tool uses artificial intelligence, but so does another option. However, the recommended option is more cost-effective over the long-term. The cost difference should be mentioned but not the line-item details. Just make sure they are available in case someone asks.
Boards are all about risks. Most IT projects include risks associated with doing something but few consider the risks of doing nothing. The opportunity costs of an IT investment are just as crucial to understanding risk. Opportunity cost is the loss that results from choosing one path over another. For IT, that means defining what the costs would be for not implementing the proposed solution.
Let’s say customer retention rates are declining by 5% every year. Doing nothing means that the retention rates will result in a loss of 500 customers in five years. Each customer averages $200 in purchases per year. If an organization does nothing, it will lose $100,000 in revenue per year. Then, there’s the cost of acquiring new customers to replace existing customers. For the financial services sector, that averages about $1,800 per new customer. Doing nothing costs the company about $1 million.
If CIOs present risk in terms of what the business may gain and lose, it gives executives a better understanding of what it means to delay a decision. If a company’s leadership does not see IT as having a strategic impact, they are more likely to view the investment in terms of spend only. Showing executives that the cost of doing nothing is a million dollars is a clear motivator for the IT investment.
Data collection should include talking to other departments. Whatever the IT investment is, it will have an impact on others. If CIOs discuss potential impacts with other departments, they can develop strategies to counter objects. They can work with executives before the presentation to mitigate their concerns. Something as simple as failing to account for regulatory concerns could derail an investment. Getting to know the concerns of others is crucial to a positive outcome.
As CIOs talk with others, they should identify those groups that will receive the most benefit from the investment. Let others who will benefit help convince the Board that the IT investment is the right solution. If CIOs can’t convince other departments, they certainly won’t be able to get the executives on board.
Tell a Story
The best presentations tell a story. CIOs may think there’s no story to tell, but every series of events is a story. Take the cybersecurity example. The story begins when the company wants to ensure its digital assets are secure as they are moved to the cloud. The executives want to avoid a cyber incident that can result in a damaged reputation, possible compliance fines, and loss of customers.
The CIO goes in search of the best solution to the problem. Several solutions are looked at, but one was too costly and another didn’t include AI functionality that was determined to be vital to an effective solution. The third solution was the right fit for the problem.
From that point, the story is about how the solution’s functionality is going to address the company’s needs, followed by a summation of the improvements the company will realize as a result of the implementation. By viewing the presentation as a story, CIOs can put the events into a sequence that creates an order for the presentation. Plus, people remember stories much better than they remember isolated facts.
Phrasing the decision as part of a business strategy uses language executives understand. Talking in technical terms such SaaS solutions or increased bandwidth does not equate to a business value; however, CIOs who can explain SaaS as a low-cost alternative with faster response times are more likely to get buy-in.