CFO IT - Spring 2004 Issue

The Great Divide

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The lack of follow-up can create problems, especially with ERP systems that dictate an organization utilize one central database so that all its numbers and data are consistent. "Without the CFO's backing, people start using spreadsheets instead of the ERP system," says Bihun. "And the numbers may not jibe."

A Matter of Time
With the recent economic downturn and the demands of Sarbanes-Oxley compliance, many finance executives today have little time or energy to devote to technology issues, CIOs assert. "Because of the state of the economy and the competitive environment we are in, the CFO has to concern himself with the financial condition of the company," says Bihun. "That was not true in the past. The CFO was there when I needed him."

"The CFO function itself is changing, with more time required for risk management, due to Sarbanes-Oxley, versus strategy," says Randy S. Stone, vice president of enterprise information technology at Teradyne Inc., a Boston-based electronics manufacturer. (Note: In our IT Directions 1.0 survey in "The Truth about Tech" (CFO IT­, Fall 2002), 73 percent of CFOs surveyed said they were spending "significantly" or "moderately" more time on IT issues.)

AlShahri adds that CFOs often have a "quarterly oriented mentality," given their focus on meeting Wall Street projections every three months, while CIOs are process-oriented and take the longer-term view. "It is like two people; one is having a magnifying lens and the other has a wide lens," he says. "Who can see more of the road?"

Stone agrees that it is critical for a CFO to have a broad lens when looking at IT investments. For example, when Teradyne moved some of its electronics manufacturing operations to low-cost regions such as the Philippines and China, its technology costs went up because of the need for systems and communications capabilities to operate in these areas.

"CFOs have to appreciate this kind of thing," she says. "Their lens has to be very broad." Stone says that Teradyne CFO Gregory Beecher "absolutely" understood her concerns. Score one for teamwork.

CFOs who refuse to look beyond the bottom line tend to characterize IT as strictly a cost center. In these situations, the CIO serves essentially as a project manager with a mandate to get maximum ROI on every initiative, spending most of his or her time supervising vendors and outsourcers.

"When I worked as a CIO, the CFO had to approve all purchasing decisions and was very cash-flow-focused," says Zammuto. The environment was one in which Zammuto had to quantify benefits on everything, which he sometimes found unrealistic. "It is notoriously difficult to quantify benefits on various technology initiatives, such as E-mail, despite all the emphasis on ROI," he says. Frustrated at being excluded from mainstream management decisions, Zammuto, a former CIO, resigned to take the same kind of job at Ecometry.

Stone says that at Teradyne, they talk about these costs as "balloons" and "anchors." By focusing only on IT cost cuts—the balloons—the CFO can effectively negate enterprise cost savings the anchors might bring about.

Ups and Downs
One challenge that has long confronted CIOs centers on with whom exactly they should have a dialogue. When IT was a back-office function, typically served by a mainframe or other large computer system, CIOs didn't talk with much of anyone. Throughout the 1990s and in the run-up to dot-com mania, IT emerged as a strategic discipline, and CIOs often found themselves reporting to the CEO. When the economy sputtered and "Internet time" was tossed on the buzzword scrap heap, CIOs found themselves reporting to CFOs. Sometimes that relationship is strong, but often it is not.

A number of CFOs, CIOs, and others say that, regardless of which way the lines fall on the organization chart, a successful partnership between the CIO and CFO is key if the elusive goal of IT/business alignment is to become a reality. That goal is further advanced when CIOs have the ability, through their own skill sets and the mandate that's given to them by their companies (read: bosses), to approach their jobs strategically.

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