Becoming a High-Tech CFO
Certainly, more-specific IT knowledge is necessary at companies where technology decisions directly affect the company's strategy. At Boston-based mobile software application developer Isovia Inc., Peter Phelps says his demonstrated interest in the details of enterprise software development gave him the edge over other candidates for the CFO job last spring. "I found my background in IT was a major differentiator, because it meant I had no learning curve," he says. "If you don't have a foundation of IT knowledge, the CTO can't even explain the business issues to you; he won't have the patience." Phelps, who has long had a fascination with computers and previously worked for two other high-tech start-ups, says he made sure to inject informed questions — like "How many lines of code do you currently have?" — into his prehire interviews. "It's not like they give you a test, but the dialogue usually reveals how much someone knows."

But even Phelps admits that advancing his understanding of technology requires a dedication to ongoing self-education. He says he "religiously" reads about 20 monthly technology magazines, and spends two to three hours per week with his CTO. "This kind of knowledge is also very effective in sales calls, when I try to explain our products to other CFOs, who ultimately decide whether or not to buy," he notes.

CFO vs. CIO
As technology decisions mushroom in importance, there's some evidence that CEOs are more willing to lighten the CFO's load. "There's just too much to know too quickly as a CFO, especially with the rate at which technology is changing," says Doug Tatum, who recently launched Atlanta-based Tatum CIO Partners LLP to shore up the eponymous CFO partnership he founded in 1993. IntelliCare CEO Victor Otley, who hired CFO Lester and a new CIO concurrently last summer, agrees: "We wanted a CFO who understood the operating side of our business and the markets we were going into — IT familiarity was less important, since we had a very strong CIO."

Of course, this also creates something of a turf war. The question of whether the CIO should report to the CFO is still fair game to discuss in job negotiations, recruiters say. Currently, about 50 percent of CIOs report to CFOs, with around 30 percent reporting to CEOs and the balance reporting to other officers, according to a recent Financial Executives International survey, consistent with results from the previous three years.

But how the reporting relationships ultimately shake out may depend more on how thick the line is between internal IT needs and the company's products than on the strength of the CFO. CFO Mark Bonavia, for example, had enough IT experience from his days as a Deloitte & Touche consultant to warrant the American Institute of Certified Public Accountants's new Certified Information Technology Professional accreditation without even having to sit for the exam. However, when he joined E-procurement technology developer Supplycore.com last year, he says there was little debate about the CIO reporting to him. While the CFO is certainly involved in IT strategy and some projects, "it was a mutual decision that IT was so critical to the success of this organization that it had to be reporting to the president," he says. "In a dot-com environment, it's the only organizational structure that makes sense."

Alix Nyberg is a staff writer for CFO.

Tips for Negotiating with Vendors

• Tie payments to the achievement of milestones, such as successful implementation.
• Include a detailed description of all testing required, such as code walk-throughs and integration testing, in the contract.
• Specify that "acceptance" will occur only after implementation and successful testing.
• Spell out what type of ongoing support the contract price will cover, and what will entail extra charges.

Source: Saul Ewing LLP

How to "Boot Up" Your IT Knowledge

One way to stay on top of IT changes is to maintain a steady diet of technology reading, including industry magazine and analyst reports. Another is to attend technology "boot camps."

FMC Corp. CIO Craig Watson, for example, took a five-day, customized session organized by consulting firm Gartner when he made the leap from CFO to CIO. The camp he attended was from 8 a.m. to 6 p.m., with 60-to-90-minute, one-on-one analyst sessions. "As a result of that program," says Watson, "I was fairly comfortable with the lingo and how things fit together."

Information Week and Stanford University jointly offer a five-day program addressing technology's role in finance and other areas of business at least once a year.

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