However, when the company was bought, Lynn decided that it was time to stop being a full-time CFO, and do something else. She chose to stay engaged professionally by being a board member, and she is now a member of three different boards.
Lynn is in a unique position to tell us what you need to do to justify a technology investment to the board, as she has been on both sides of the spectrum. Let’s see what her answer is:
The top 3 things you need to do to justify a technology investment to the board
At Consero, around 80% of our clients are backed by private equity. So, whenever one of those companies wants to use Consero’s services, they need to justify the investment to the board first.
Many of them use different methods to explain to the board why the investment is sound, but Lynn has only three main things that you need to be aware of:
- Describe how the investment aligns with the strategy of the company
The first point is the most important one as well. Many technology investments are often very opportunistic, and because of that, you can easily get lost in them. It often happens that you don’t consider how it aligns with your strategy.
Additionally, you can’t merely say that it aligns with your strategy. It might not work well with it at all.
You have to consider a few things:
- The main things you want to do and achieve as a business
- The things you want to do over the next few years
- How the investment aligns with all of that
Only when you consider all of this can you adequately justify the technology investment.
- The numbers
The second point is familiar to most professionals, and it often trumps the first one, even though it shouldn’t. However, you still need to know how much the investment will cost the company and adequately present that to the board.
- A combination of numbers and objectives
The third is Lynn’s combination of metrics and objectives. It’s what you think the investment will eventually yield. Not in terms of ROI, but what it will actually bring.
This part requires writing things down. You need to write down what you believe will happen from the technology investment. Whether it’s numbers or explanations, it’s still important to write it down as that helps you be more thoughtful. It forces you to explain the opportunity properly.
Being a board member and a former CFO, Lynn feels that these three things always apply. However, she also points out that you need to understand that any kind of investment might forgo several others in the future. So it’s important to flesh things out, see if it will all work, and remain prepared to sacrifice some things in the future.