3 ways for CIOs to understand their company’s bottom line

Tech execs who aspire to be CEOs or COOs someday must commit to understanding the financial aspects of their field and their firm.

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For many IT execs, the drumbeat of "know the business, know the business" has become just so much white background noise.

That's why the insight of Hewlett-Packard CIO Ramon Baez is so refreshing. Speaking earlier this year in an online event examining the changing role of the CIO, Baez couched the issue of understanding the business purely in financial terms: "The language of the business is finance. When the CIO understands how the company makes money and loses money, that's when you understand what to focus on and what not to focus on," he said.

John Reed, senior executive director at IT staffing firm Robert Half Technology (RHT), says, "Companies aren't necessarily looking for CIOs who know how to read an accounting ledger. But can they understand what contributes to financial performance?" IT executives need to be able to look at a financial report, identify the top and bottom lines, recognize where the profit comes from, and then put on their CIO hats and identify where technology can do things to reduce cost, increase profitability, and identify new business opportunities. "If you can read those reports, you understand where your highest impact is," says Reed.

To be sure, any C-level executive worth his or her salt has a basic understanding of what brings in the revenue. What Baez and his counterparts are advising is that IT executives dig deeper -- first gaining a precise understanding of how the company earns money, then analyzing how technology might add leverage to that process.

Based on interviews with CIOs and former CIOs, Computerworld has developed three key tips that help CIOs up their financial game (and one bold suggestion for up-and-comers).

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