CFO: Managing The CIO

January 11, 2010

A decent article at silicon.com titled; How to manage your CIO: What every CFO needs to know

I can only rate it as ‘decent’ because a few of the recommendations are from constituencies with vested interests in one space, and their opinion is that their space should always be job 1. (The cat will always tell you to leave the bird cage open right??)

To quote from the article;

Around 23 per cent of CIOs surveyed last year said they currently report to the head of finance, compared to 38 per cent who reported to the CEO.

It is not just the overall percentage of CIO’s reporting to the CFO, the article contends that IT Leadership reporting to the CFO is also trending upwards. Overall I agree with most of the details outlined. In fact, in the SME space, it is probably more common for IT Leadership to be reporting to the CFO anyway.

So, What if you are not a techie CFO?

Many of the individuals interviewed agree that there is not a huge need to be a pure technologist when managing your IT Leadership. That is very true – however you must be able to understand the relevant level of detail about IT.

As a CFO, you would not approve a new facility without understanding the pros and cons of each possibility in that decision! And for many businesses, IT is frequently even more of an investment, so understanding its applicability and limitations is critically important. (Hint: IT does two things really well, integration and standardization)

Consider a second reason for this relevant level of detail. Your sales team has initiated a project that requires extensive IT support and assistance. Your IT Leadership has recommended Vendor ‘A’ as best at meeting the technical part of those requirements. But hey! after a golf game – a sales chap tells that Vendor ‘B’ has a product that should be less expensive!

What you may not know is that option ‘A’ is leveraging all your existing, (and amortized)  infrastructure investments, and is also leveraging existing skill sets. Option ‘B’ requires new infrastructure, new skills, and new resources. (Hint: Your investment today is your operational cost tomorrow!- so it pays to understand what those choices will be like down the road.)

The (In)Famous SiloOrganizational Silo

The two organizational processes that usually have the most cross functional view of your organization are finance, and IT. With your IT reporting directly to finance, there is always a risk of IT becoming a single silo under the finance portfolio. Since IT has its fingerprints across your manufacturing, your supply chain, everywhere, you need to avoid the problem of IT becoming too insular, risk can rise as input is not obtained in a cross business fashion on initiatives.

As an example, CFO’s can be comfortable insuring or hedging facilities or currency risks, but the risk of data theft through improperly secured POS (Point of Sale) or other systems can be new. (hint TXJ Nasdaq TJX reportedly absorbed a 188 million charge after their POS breach led to the theft of credit card data) Ann All at IT Business Edge has another example of that here.

Look at The Soft and Squishy

Sure, there are hard dollar ROI calculations that can be made when investing in quantitative business technologies that improve transaction speeds or processes. But one area where finance and IT Leadership can learn from each other is improving the calculation of soft benefits in IT. These softer dollars can include external qualitative issues such as brand awareness or customer loyalty. But they can also include internal issues such as collaboration or convergence.

And Finally

IT and Finance should be meeting regularly anyway. Double that for their leadership teams.

Meet regularly, ask questions, play the devils advocate

And for heaven’s sake, ensure everyone is speaking English (or your native language!)

You can get updates to this blog by clicking the RSS icon on the Home Page!

Photo Credit Let Ideas Compete via flickr

Advertisements

4 Responses to “CFO: Managing The CIO”

  1. elliotross Says:

    CFO’s can have a tough time with calculating ROI on that – simply because it can be difficult to do because:

    if we have a hypothetical balance sheet that we can call example A, it may show zero CAPEX costs for IT infrastructure, yet it has no means of accounting for hours of lost productivity and frustration as IT infrastructure assets have failed, no way to account for inefficiency in IT service etc.

    https://elliotross.wordpress.com/2009/08/11/itil-lies-damn-lies-statistcs/

  2. plannetplc Says:

    Non-tech CFOs should listen to techies when they suggest the implementation of Best Practice in their IT strategy – how much money would that save the whole company? http://plannetplc.wordpress.com/2010/02/02/can-you-afford-not-to-invest-in-best-practice/

  3. elliotross Says:

    Thanks!

    Will have to check it out!

  4. Janice Gaines Says:

    Anyone else here reading “I.T. WARS”? I had to read parts of this book as part of my employee orientation at a new job. The book talks about a whole new culture as being necessary – an eCulture – for a true understanding of security, being that most identity/data breaches are due to simple human errors. It has great chapters on security, as well as risk, content management, project management, acceptable use, policies, and so on. Just Google “IT WARS” – check out a couple links down and read the interview with the author David Scott. (Full title is “I.T. WARS: Managing the Business-Technology Weave in the New Millennium”).


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s