What do good finance-IT partnerships entail? CFOs and CIOs we spoke to said a shared sense of mission and an organizational structure that gives IT the proverbial "seat at the table" are critical. Several companies said it makes little difference whom the CIO reports to as long as he or she participates on the committees that drive strategy. Most CFOs agreed, and seem eager to have CIOs participate in such efforts versus being brought into the loop after the fact.
Perhaps more important, if less quantifiable, is a certain comfort level between CFOs and CIOs that, whether CIOs like it or not, often comes down to the technologist possessing a strong grasp of finance even as the finance expert makes do with only a rudimentary knowledge of what technology can and can't do. "We have a running joke," says Geswein, "in which I ask why we can't do this or that and John will say, 'Well, if you understood the technology....'"
At some companies, it's not only the CFO who happily swears off a detailed knowledge of technology; the CIO does, too. At Saucony Inc., a small ($136 million) publicly traded maker of athletic footwear and apparel, CFO Michael Umana says that while the company's senior vice president of operations and technology, Sam Ward, does report to him, "I'm happy to stay out of the fray. In fact, I love the fact that I get to forward ERP vendor phone calls to Sam."
But Ward, who went through General Electric's financial-management training program before earning an MBA and then working as a consultant at Arthur Andersen, disavows a deep knowledge of technology, saying that he's most comfortable with supply-chain, operations, and IT planning issues. He relies on Andy James, vice president of MIS, to serve more as a "pure" technologist. So James is the person steeped in computer science? Not at all — before moving into IT, he served as controller and was once an accountant at a Big Eight firm. "Managerial training and financial literacy are the keys to solving business problems," says James. "Some people in IT don't get that."
Saucony's everyone-is-a-finance-guy approach may be unusual, but it does underscore the way in which finance and IT are working more closely together. "Finance," says Ward, "is the language of business decisions, from IT to marketing to operations."
United by that common language, Umana, Ward, James, and other leaders have spent a significant amount of time and money not on IT strategy per se, but on streamlining operations, with IT as a vital part of that process. Umana may not feel pressure to understand the inner workings of software, but when he says, "We've gone from 2.5 to 5 inventory turns per year; improved our gross margins, working capital, and several other financial metrics; and now have a 98 percent on-time delivery rate," it's clear that he understands exactly how IT has played a part in all these achievements.
"We have a shared vision in how we want to move forward," says Umana. "There are no gaps in understanding between decision-makers, and finance education is key to that."
That's not to say that CFOs have simply convinced CIOs to deliver status reports long on finance buzzwords and purged of technobabble. Geswein says he spends about one-fourth of his time involved in IT issues, while Umana says that "we combined operations and IT because they are so closely linked that we can't tell where one ends and the other begins, and I spend a lot of time with Sam and Andy working through operational issues that have a huge IT component."
At First Tech Credit Union in Beaverton, Oregon, CFO Mike Osborne says, "I spend more time thinking about technology strategy implications to our business than I do on the finance side." The 12-branch, $1.4 billion (in assets) credit union has a very tech-savvy client base — one-third of its 130,000 members use electronic banking services, an industry high. The credit union places such a premium on cutting-edge features, in fact, that Osborne has no fewer than four CIOs reporting to him. "IT used to report to the CEO," he says, "but I think it wore him out."
So Osborne, the credit union's controller, and the four CIOs (who oversee core systems, development, E-business, and security) all work closely, to the point where Osborne says that finance and IT are "joined at the hip" regarding business strategy. Osborne describes himself as a voracious reader of anything pertaining to IT management, but also says that "one advantage of being a CFO is that I get to ask dumb questions, and every once in a while, I'll stumble onto something we hadn't thought about."
Osborne also teaches his IT staff about the credit union's current business climate, from current income to interest rates to priorities for the next 12 months. Vice president of E-business Char Shinn says that's helpful, in part because "prioritizing IT projects can get to be contentious, so it's important to have a clear sense of business direction. If your project gets shot down, you know why."
Kitchen-Cabinet Approach
Nothing about finance-IT cooperation mandates that the CIO report to the CFO, of course. At DTE Energy, both CFO David Meador and CIO Lynne Ellyn report to CEO Anthony Earley, but find themselves working closely together, in large part because of two major projects: Sarbanes-Oxley compliance and the rollout of a new ERP system meant to tie together what growth-by-acquisition hath wrought.
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