VideoTwo years ago, at a panel discussion on the sometimes contentious relationship between CFOs and CIOs, one finance executive drew a hearty laugh from the crowd when he said, "My relationship with our CIO poses no problem at all — because the position is currently vacant."
At about the same time, another company, Diebold Inc., also had a vacant CIO position, and CFO Greg Geswein was eager to fill it. The 146-year-old company was in the middle of a 6-year acquisitions-driven growth spurt that would see its revenue double from $1 billion to $2 billion, and Geswein knew he needed a new IT leader who could "act as a real business partner and get involved in strategy, adding value to things like the due diligence around mergers and acquisitions." But more than that, he says, the company wanted someone who could help build a sense of excitement around the many changes that Diebold anticipated making to its overall business.
Enter John Crowther — eventually. "It was tough to find a guy like John," says Geswein. "He wasn't a traditional CIO steeped in technology. We looked at quite a few people before we found someone who could go beyond managing IT as a utility, and instead think about the art of the possible and the role that IT plays in business transformation."
That sounds like the sort of dream job CIOs have all but been told to forget about, especially if the CFO looms as the boss. "When we market [the] CIO [position]," says Mark Polansky, CIO practice leader at executive-recruitment firm Korn/Ferry International, "one of the first questions we get is, 'The job doesn't report to the CFO, does it?'"
Increasingly, it does. And that has broad implications for both finance and IT. While in some respects, this movement to have IT report to finance represents a return to old ways (see "The Shape of Things to Come"), it is not simply deja vu all over again. While Crowther's experience overseeing a major ERP implementation at Cummins Inc. was one factor in his being hired at Diebold, for example, it was his non-IT background that made him an ideal candidate — he had spent more than a decade in a variety of posts, including marketing, operations, and finance. And, having served as controller of the components group at Cummins, Crowther knew a thing or two about managing complex processes. This is essential at Diebold because, as Geswein says, "we pound and pound on the idea that this business transformation effort is not an IT project — it's something much bigger than that."
And smaller. While the company's investment in ERP was sizable enough to merit a mention in its annual report, Diebold's overall IT budget is staying flat — due in part to outsourcing — and its overall footprint (that is, number of staff) is actually declining. If Diebold was to represent a growth opportunity for Crowther, it certainly wasn't going to come in the form of an expanding IT fiefdom. Rather, it would come from a chance to help drive overall growth, something he says was lacking at his previous job, where cost-cutting was the top priority.
Now, working side by side with Geswein (literally, as the two have adjoining offices), Crowther says the prevailing sense of partnership makes all the difference. Geswein agrees. "In some ways, we're lucky," the CFO says. "We have this huge project that we can rally the entire organization around, and it really pulls finance and IT together. Other companies lack that."
They may lack the project, but many companies are attempting to rally the troops around this new reality nonetheless. A recent survey by McKinsey & Co. found that the number of CIOs reporting to CFOs doubled in 2003, and the consultancy expects that trend to continue as companies look to get more value from IT. Other surveys have found similar results, and IT consulting companies and magazines are now bursting with advice for CIOs on how to get along with the new boss.
At many companies, they don't. As we reported earlier this year (see "The Great Divide"), when given the chance to speak candidly about their working relationships with CFOs, many CIOs expressed frustration that they are constantly asked to do more with less, are shut out of key committees or teams that shape strategy, and are unfairly tainted by distant memories of failed projects for which they do not deserve blame.
If You Only Understood
While those gripes are legitimate and unlikely to vanish overnight, as companies adjust to this new world order they are finding ways to develop strong working relationships between finance and IT, relationships in which finance does not merely approve (or deny) budget outlays, but works side by side with IT to achieve the alignment that has eluded most firms for so long. Recent studies from Accenture and Bain & Co., to cite but two, find a majority of executives simultaneously crediting IT for boosting productivity and enabling growth and also blaming it for failing to deliver benefits proportionate to what's spent on IT and inhibiting growth in a number of ways. Those mixed reviews often lead to frustration with IT and hence to the new alignment between CFOs and CIOs.
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