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.
As CFO IT reported earlier this year, 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.
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.
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. 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.” (For more, see the cover story of the Fall 2004 issue of CFO IT, “Stand by Me.”)