CFOs are taking on more and more IT responsibility. So how do they know where to focus their attention - and the company's dollars?

How has today's financial executive arrived at the forefront of information technology leadership, innovation and insight? Because fiscal responsibility rests with the CFO. As guardian of the corporate assets, he or she must mediate various business and budgetary alternatives ant conflicting priorities to make sure resources are allocated to the most promising investments and programs.

In an IT context, this means ensuring that technology investments yield business value, and that IT decisions are aligned with the company's business strategy and operating model.

For the second consecutive year, Financial Executives Institute and Computer Sciences Corporation took the technology pulse of FEI members. Over 50 percent of 1999 respondents head the "very critical list" with the same four top financial management issues as they did in 1998:

* Prioritizing technology investments.

* Establishing and maintaining an effective dialog between information services and users.

* Ensuring Y2K compliance.

* Identifying the appropriate level of technology investment.

But at least half of this year's respondents add two "very critical" issues:

* Identifying how IT can improve or influence business processes.

* Upgrading or replacing legacy systems.

Is there a discernable link? Obviously, Y2K concerns are paramount as the immovable compliance deadline looms. The survey was circulated in November and December of 1998. Returns indicate only about 30 percent of respondents had completed their preparedness activities at that time - and about 20 percent are "in the danger zone": either assessing or renovating, largely irrespective of company size or industry.

Then, too, no industry allocates less than 8 percent of total actual IT spending to Y2K - and overall, spending averages 13 percent. These are dollars that, in other years, might have been classified as "discretionary spending." Thus, cost alone could elevate Y2K to critical status.

And finally, Y2K concerns must loom large for all companies that interact electronically within a trading partner network. Despite their own readiness, how can companies be sure a customer, supplier or other partner won't disseminate "date-impaired" information?

The millennium bug has also stung respondents' consciousness over upgrading or replacing legacy systems. Clearly, the shortcomings of legacy applications would be a broad concern regardless of the date, but now firms face a double threat: old, low-functioning systems and an intractable deadline for improving or replacing them. So, while the legacy replacement/renovation issue has been accentuated by Y2K, it also joins the four critical issues by speaking to the importance of understanding and maximizing technology's value to the business.

Thus financial executives' concerns fall into two camps: the near-term need to avoid business interruption (Y2K) and the ongoing need to link IT to business results in a cost-effective way.

Pulse Points

According to respondents, a company's CIO is more than twice as likely to report to the CFO as to the CEO, and five times more likely to report to the CFO than the COO. Moreover, nearly two-thirds of all respondents say that, in their companies, the information systems function reports to the finance function - higher by far than any other non-finance activity. The message is clear: Today's financial executives are IT users, IT administrators, IT decision-makers and IT strategists.

Despite Y2K's imminent, tangible danger, "prioritizing technology investments" is a very critical concern of equal import. Moreover, this area racked up more combined "very critical" and "somewhat critical" votes than Y2K: 13 out of 14 respondents attach some level of criticality to it. Several interrelated factors probably drive this concern:

* The business environment is more complex and dynamic than ever.

* Shareholder expectations continue to ratchet up, magnifying the rewards and penalties associated with business and technology decisions.

* The scope and scale of IT investments (impact on the enterprise and required dollars, staff and time) continue to grow.

* Most technology life cycles are becoming shorter, even as technology alternatives become more varied.

* The IT workforce is extremely fluid.

* Estimating - and then actually measuring - returns from major IT investments often is difficult or nearly impossible.

* While actual quantification is hard, the perception of returns from past initiatives often is marginal.

CFOs also believe there's an "information gap" between available functionality and the needs of the business. These views are reflected in two high-profile concerns: "reducing enterprise operating costs" and "measuring product and customer profitability" - which mirror the survey's most consistently voiced theme: Companies want information to make better decisions and improve business performance.

For a complimentary copy of the full study report, contact CSC's marketing department at (800) 272-0018. If you'd like to discuss the survey findings, contact CSC's Jerry Boltin, at (630) 472-1246, or Stacy Gorneau, at (973) 243-7558.

Here's How The Numbers Break Out ...

What Did Technology Ever Do For You?

When asked for the three primary criteria they use to evaluate their return on IT investments, CFOs focus consistently on issues that affect the competitiveness of the business. Interestingly, these rankings are about the same regardless of whether they're tallied on the basis of "most frequently cited number one response" or "most frequently cited as a top three criterion."

Criteria to evaluate return on investment (ranked by most frequently cited)

1. Helped us cut operating expenses

2. Gave us the opportunity to enhance operating revenue

3. Enabled us to keep even with, or stay ahead of competition

4. Positioned the organization to increase market share

5. Helped the company reduce lead times

6. Provided us with the opportunity to enter new business areas

7. Improved internal controls

8. Investment meets pre-established financial ratios

Measures of Success

How do you determine the success of your projects?

System functionality meets user needs - 42%

System enables the company to operate more efficiently - 23%

System has improved the company's competitive position - 19%

System was delivered on time and within budget - 13%

System has paid for itself - 2%

Other - 1%