Mike Herring knows a thing or two about leveraging the relationship between CFO and chief information officer. During his time running finance at Adobe Systems, before he became finance chief of Pandora last February, the information-technology department reported to him. In fact, he worked with the CIO to transform an older back-end system to a more user-friendly one that was more appropriate for a direct-to-consumer subscription business.
Mike Herring, CFO, Pandora
When he made the move to Pandora, Herring took what he learned at Adobe and cultivated the same open environment at the online music-sharing company. Although IT doesn’t report to him directly, Herring works closely with the department to create the road map for the company’s back-office systems.
Relationships between CIOs and CFOs have changed over the years. With technology ever-more ingrained in the internal workings of businesses, the two positions need each other, and more importantly, need to understand each other, more than ever.
Indeed, CFOs are growing in their roles as technology influencers, according to the 2013 Gartner FEI CFO Technology Study, which surveyed 237 financial executives from October 2012 to January 2013. Forty-four percent of respondents said their influence over IT investment had increased over the past two years. Additionally, the report concluded that CFOs more than ever are acting as decision-makers for technology investments. In fact, the study found, 39 percent of IT organizations report to the CFO.
Cheryl Kim, CFO, Astreya Partners
Ten years ago, Cheryl Kim, CFO of Astreya Partners, didn’t know a thing about technology and didn’t think about it much. That changed slowly over the years — but the education process picked up considerable speed when Kim she entered the technology industry.
At Astreya, an IT services and infrastructure support firm, Kim works alongside her IT director and product developer to generate and quickly vet new ideas. In addition, Kim hosts technology strategy sessions that push Astreya to be more “innovative in our thought process,” she says.
Although there is generally a respectful relationship between the CIO and CFO, there is often friction, says Kim. CFOs want to know about return on investment, but the technology department is not well versed in the financial point of view. That can breed tension. The two parties may, for example, differ on how much to invest in new technologies.
CFOs, naturally conservative with cash, don’t always move fast enough in allocating funds for technology upgrades. But nowadays the CFO’s role is so much driven by technology, Kim says, that the two executives get on the same page as to understanding what long-term goals such investments can help the company achieve.
It’s not always beneficial for CFOs to be the company’s “no” person, says Toby Redshaw, CEO of tech consulting firm Kevington Advisors and former CIO at American Express and Aviva.
At Pandora, Herring spends a good chunk of time with his IT team looking into new technologies, building road maps, creating infrastructures and leveraging proprietary technologies with third-party vendors. His team recently finished a nearly two-year project to implement a new internal management system that makes billings and collections work seamlessly with financial systems, Herring says. Technology discussions within Pandora are productive because Herring works with a technology liaison who “ensures that we have a single voice in our requirements when speaking with the technical side,” he says.
CFOs who don’t understand their role alongside the CIO will remain ignorant to where technology is headed and what it can do for the company, experts contend. “They will be the guys that show up to a gun fight with a knife,” Redshaw says.