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What startups can teach CIOs about IT funding

Getting the CEO and CFO to fork over funding for innovation IT projects is never easy. At the Fusion 2015 CEO-CIO Symposium, Gartner's Barbara Gomolski advised CIOs to look at how startups raise capital. Here are three tips.

CEOs and CFOs tend to be skeptical when it comes to funding special IT projects, Barbara Gomolski, managing vice president of CIO and executive research at Gartner, said at the Fusion 2015 CEO-CIO Symposium in Madison, Wisconsin. That skepticism may actually be well-founded, she said. "In the past perhaps IT wasn't as responsive as [the CEOs and CFOs] thought we should be. We couldn't move as fast as they wanted to and that wasn't always our fault; sometimes it was a constraint of the technology," she said.

Fault or no fault, the result is the same: IT projects are getting short-changed, Gomolski said. She suggested CIOs look at startups for inspiration on how to obtain funding.

Raising money the startup way

Entrepreneurs pitch their ideas to investors all the time; in order for CIOs to get funding for their IT projects they "have to act like an entrepreneur," Gomolski said. After all, CIOs are basically the CEOs of IT Inc., she said. They should think of their IT projects as the equivalent of great ideas for a startup and figure out how best to raise money for them.

Here are three ways she said startups make themselves more appealing to potential investors:

Barbara Gomolski Barbara Gomolski

1) Sell the vision.

"If you've ever seen an entrepreneur … get up and ask people for money, they don't talk about the product specs and all the down and dirty stuff," Gomolski said. "They get up and they sell the vision."

They paint a picture for their potential investors, tell them what the return on investment will be and get the investors excited, Gomolski said.

They say things like "I have a vision that my application is going to change the way people do banking" or "I have a vision that I'm going to improve the lives of diabetics," she said.

For the IT organization, the vision should be the business case, Gomolski said.

"So think about how you can use that," she said. When it comes to IT projects: "Is it something people can get excited about? Is it something people want to get on board with?"

2) Use "hothouse days" to green-light IT projects.

"Hothouse days" are when enterprise companies take two or three days to gather executives, business leaders, business process experts, IT leaders, etc. in one room to tackle business problems and innovate, Gomolski said. This is one way companies can try to adopt the agile aspects of a startup, she said, by deciding "yay or nay" on a project and then moving forward quickly.

"We work with companies that do this kind of hothouse technique, and in two or three days they can solve a dozen big business problems or they can advance product lines like you can't even believe," Gomolski said. "In two or three days! Not months. Not years."

Speeding up the process and choosing to pursue more effective projects over others will help IT act more like a startup and also help convince the CEO and CFO that IT projects are worth investing in, she said.

3) Hire a social scientist.

Startups "employ people like economists, behavioral economists, psychologists and anthropologists, who go out and watch people using their products," Gomolski said.

Gomolski explained that startups do this in order to observe how customers are using the technology and anticipate what they need next. Unfortunately, this is an area where IT is often lacking.

"[IT is] really good at execution and enabling information technology [but] we don't really know a lot about how people use IT, right?" Gomolski said.

Now is the time for IT to bring in talented people who can do this, she explained. Bringing someone like a social scientist onto the IT team would help increase the effectiveness of the technology and services the company is providing which, in turn, will also help convince the CEO and the CFO to get on board with IT projects. If IT’s effort to focus more on human needs succeeds, Gomoloski predicts the CEO and CFO will soon see that the projects the IT organization is implementing are actually  one step ahead in meeting the needs of the company's customers and users, rather than lagging behind.

How to win over the CFO? Kill IT projects

Adopting aspects of a startup culture will help get IT employees revved up about their work, but CIOs still need to know how to talk about IT projects in a way that that will get CEOs and CFOs excited, added Gomolski.

One approach CIOs can take is to ask their CEOs and CFOs the following question: "Is there anything that we're going to be doing at scale that doesn't involve information technology?" The answer these days is almost certainly 'No,' she said, but it is still the CIO's responsibility to make the case why any project of scale will be better if it involves information technology.

Pull out the IT project portfolio and make the CEO and CFO see how IT projects and initiatives are supporting their business strategy.

However, simply spewing out IT project after IT project isn't enough, especially when it comes to convincing the CFO that IT is worth investing more money in. The case must be made about how these projects will pay off.

"If at the end of the day people don't feel confident about what they got from those projects, that's a problem," she said. A CFO's lack of confidence in the ROI of IT projects is understandable, she explained, because with hundreds of IT projects happening each year, it can be difficult for CFOs to keep track of the ROI of each project. They don't have the time to track each project. Her advice to CIOs is to develop "ruthless focus" on projects that are backed by an executive and are going somewhere.

And for the projects that aren't quite making it? Kill them, Gomolski said.

"If I can give you one piece of advice on projects the answer would be: Kill a lot more," she said. "I think that will do a lot to improve your overall value proposition."

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