Why CIOs must be more financially savvy than ever

As software prices continue to rise, hospital and health system IT leaders are increasingly becoming financial stewards for their organizations. 

"We are not simply IT leaders, we are business leaders and finance wisdom is just as critical as technical wisdom for a CIO," Anna Turman, division CIO for the Midwest Division of Chicago-based CommonSpirit Health, told Becker's

In June, The Register reported that the persistent impacts of COVID-19, escalating inflation, surging energy expenses and geopolitical instability have contributed to price hikes from software publishers across both on-premises and software as a service product lines throughout the 2022 and 2023 financial year. Software company Vendr even referred to 2023 as "the year of software price hikes."

These rising costs, according to Muhammad Siddiqui, vice president and CIO of Richmond, Ind.-based Reid Health, poses a significant challenge for hospitals and their IT departments, which is why CIOs are being tasked with implementing strategies to mitigate costs effectively.

At North Country Healthcare, based in Flagstaff, Ariz., an IT cost optimization framework was established. The framework prioritizes the principles of elimination, simplification, utilization, standardization, centralization, automation and renegotiation whenever possible. 

The approach, according to Darrell Bodnar, CIO of the organization, has played a crucial role in effectively managing costs while aligning with both short-term and long-term strategic objectives.

"Developing a strategically aligned capital and operating budget is fundamental to our approach," he said. "It is imperative that IT investments are not viewed in isolation but are fully integrated with the broader objectives of NCH. This alignment ensures that every technology dollar spent is an investment towards our collective goals. Our process goes beyond mere budget creation; it encompasses rigorous budget and performance management, along with judicious resource allocation."

IT enablement and financial acumen

Mr. Siddiqui said financial acumen is an indispensable aspect of IT enablement.

"IT leaders must comprehend and manage budgets effectively, track ROI and make sound financial decisions," he said. "Without financial acumen, justifying investments and optimizing departmental efficiency becomes challenging." 

In his role, Mr. Siddiqui is currently focused on cost-effective strategies, which include negotiating favorable rates with vendors, streamlining IT operations, eliminating wasteful processes, and making strategic investments targeted at innovative technologies that can enhance overall efficiency and productivity.

CIOs must speak like a CFO

In December 2021, a Gartner survey revealed that organizations with robust CFO and CIO collaborations had a 51% higher chance of securing funding for digital initiatives effortlessly, a 39% higher likelihood of maintaining digital spending within budget constraints, and an 18% greater probability of attaining intended business outcomes. 

Despite these advantages, only 30% of CFO and CIO relationships were perceived as strong partnerships.

With the financial headwinds healthcare organizations are facing and the need to continue to invest in technology and innovations that will help with automation and efficiency, CIOs must talk like a CFO. 

"It is my job to make sure that I'm sitting down with our CFO and talking like a CFO," Aaron Miri, senior vice president and chief digital and information officer at Jacksonville, Fla.-based Baptist Health, told Becker's. "The reality is, I have to know enough to be dangerous. If you can't do that you can't be in the seat in the future."

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