In today's market, innovation and security are the primary filters for investing in technology. It's not an easy job to simultaneously manage costs, risks, security and regulatory requirements while driving innovation and growth. Firms that simply spend their budgets on maintaining technology will fall behind, while those that invest in innovation and integration of systems will prosper.To whom technology leaders report will often predict a firm's long-term success, including its return on tech investments. Proper governance is critical, and firms that view technology as a strategic asset get much higher rates of return than those that view it as overhead.

Relationships between executive staff and IT personnel raise several important questions:

* Is your firm's IT leader a part of the executive committee or management team?

* Does the IT leader spend time on strategic business planning, or primarily on managing projects and compliance?

* At what level is your IT budget?

* What is the level of innovation and security?

* Is the focus on cost control, or revenue generation?

* Are there departmental power struggles within the firm?

Before we analyze these, let's look outside of the accounting profession for some facts and trends to help shape our ideas about proper reporting lines. Keep in mind that the goal is to maximize the return on every investment.

NOT JUST BUSINESS ANYMORE

New technology is altering the ways that companies do business, eliminating geographic constraints and digitizing more and more transactions and documents with each passing day. Technology is the accelerator for growth, but it impacts organizations differently.

Few, if any, firms and partners are exempt from the rapidly changing environment. Many won't admit it, but they are scared and feel anxious from the pressure to change, because they have been slow to adopt new technologies and implement the training necessary to keep up with the competition.

Let's reflect on the leadership hierarchy for a moment. In a firm, chief financial officers, administrative partners, firm administrators and office managers often serve in the CFO role. Firm size and skillsets typically dictate the job description and title. In many firms, the top technology officer reports to an administrative position, rather than to the CEO or managing partner.

This reporting line is a good sign of what to expect: CFO-types focusing more on numbers than on innovation and the ability to create new revenue opportunities.

THE CIO-CFO-CEO TRIANGLE

CIO Magazine has reported extensively about the benefits of the chief information officer reporting to the CEO, rather than to the CFO. Let's review some of the numbers that the magazine compiled in a recent survey of CIOs:

* Only 41 percent of CIOs who report to CFOs are part of the executive committee, while 68 percent of those who report to the CEO are part of the executive committee.

* CIOs who report to the CFO spend more time managing projects than CIOs who report to the CEO and are responsible for strategic business planning.

* Only 31 percent of CIOs who report to CFOs spend a significant amount of time in business planning. Forty-nine percent of CIOs who report to the CEO spend a significant amount of time in business planning.

* Forty percent of CIOs who report to the CFO said that the difficulty of proving IT's value is a significant hurdle to getting their jobs done, while only 21 percent of those reporting to CEOs cited proving IT's value as a significant hurdle.

Having the right people on the management team is of the utmost importance, and they must work together as a team. From this survey, I believe that firms can draw sound conclusions on how to maximize the returns on their investments in leadership, management and technology.

The technology leader in any size firm must be able to integrate the firm's technology plan with the strategic business plan. She must be able to communicate, and focus on strategy as well as tactics. Tech leaders who report to the CEO or managing partner, rather than the CFO, are more likely to be proactive and innovative. Tech leaders who report to the CEO or managing partner spend less time justifying budgets and more time focusing on innovative strategies and visionary projects.

A NEW BREED OF TECH LEADERS

That said, it appears that the point is that governance and reporting lines are key to IT success. In theory this is true. However, the IT leader must earn the trust and respect of end users, as well as firm leadership and management.

Technical skills are no longer enough in today's environment. We expect technology leaders to possess many of the same skills that a CEO or managing partner position requires: technical skills; leadership; communications skills; the ability to market and sell innovative ideas; project management skills; business savvy; human resources skills; and budgeting and cash-flow skills.

The bottom line is that it requires an all-inclusive team to lead and manage an accounting firm. Technology is a strategic component, and should be represented on the executive committee or management team.

Firms should start to think in terms of systems and innovation, rather than applications. Getting the right people on the team, adequate planning and process improvement will allow your firm to reach its potential. AT

L. Gary Boomer, CPA, is the president of Boomer Consulting, in Manhattan, Kan.

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