Deloitte guidebook highlights CIO/CFO schism

Following its December release to the U.S. market, Deloitte Tuesday announced the availability of its self-assessment tool to Canadian financial executives, outlining eight business behaviours that create and prevent value within an organization.


the Value Habit model, the mini-book — the sixth publication in Deloitte’s ‘Straight Talk’ series designed to help companies enhance business performance — can be ordered from the consulting firm’s Web site for free. Some of Deloitte’s largest clients such as Cisco Systems and IBM are using the model within their organizations.

The kit begins with a survey to help companies determine where they stand and what measures they need to take in order to bring value into their organization. The Value Model is based on two main problems that Deloitte saw in the market, said Brent Wortman, Deloitte partner and value initiative co-leader.

“There’s a pretty big disconnect between alignment of what people have as business strategy and what they actually do when you look at where they spend their project dollars,” Wortman said, adding IT would be a large part of that. “The second piece that we found was the knowing-doing gap.”

For example, executives might say, “I know about shareholder value and I know what’s important to our company in terms of creating shareholder value.” However, what they would go do in terms of practices and the way they executed things wasn’t necessarily consistent with that, said Wortman, one of the book’s principal authors.

The model also draws on some of Deloitte’s internal research, which in the case of an online survey of 125 to 130 chief financial officers showed that one-third of respondents know what brings their organization value but don’t know how to make it real.

The model goes on to list business behaviours that destroy value within an organization followed by ways to correct them. A “value-inhibiting behaviour,” for example, is relying on established business models and technologies after changes in the market make them obsolete. The “value-creating behaviour” to solve this problem is position yourself to deal with a range of possible futures, but then hone in on what you need only for the future that actually arrives.

Examples of other positive behaviours include aligning your portfolio of initiatives with your objective and strategies, and to focus on the connection between stakeholders that create value for everyone.

Destructive behaviours include allowing initiatives to be driven by individuals and advocacy and an obsessive focus on short-term financial measures.

These types of behaviours hit close to home for one chief information officer at a Toronto-based resource company, who asked not to be identified for the purposes of this article.

“There seems to be a fundamental disconnect on how people perceive change, whether it’s technology-related or business process-related,” he said. “Change is always extremely difficult and those three points are extremely common across financial people in an organization. They just don’t get it.”

Similarly, in trying to align strategy with project dollars Deloitte found that the big disconnect for organizations was IT.

“CIOs are trying to demonstrate and communicate with other parts of the organization like CFOs and CEOs about how their investments are actually creating value for the organization,” said Wortman.

Deloitte also found the same problem in Human Resources, in that the language they speak isn’t consistent with the language that CEOs or CFOs speak, he added.

To help financial execs “get it,” the book features an enterprise value map or flow chart built on an economic model. If a company improves one area like IT, telecom and networking, for example, it looks at how that works its way up in terms of shareholder value, explained Wortman. The chart also contains a cost and benefit analysis tool to help an IT manager build a business case for making a particular IT investment, such as an enterprise resource planning system around customer relationship management.

“This framework is a language that finance guys understand backwards and forwards,” said Wortman.

To address some of these problematic organizational behaviours, the source said the IT department should try to find a tangible way to present the business case to those making the financial decisions.

“You have to find a way to make individuals around you understand how the change can be beneficial and how the change can add value,” he said, adding case studies and numbers back this up. “But it will come down to making those individuals personally believe it because they’re personally on the line if it goes wrong.”

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