Discover PerformanceHP Software's community for IT leaders // November 2012
CIOs and CFOs: Can this relationship be saved?
A Discover Performance webinar brings the two sides together to hash it out.
CIOs and CFOs in many enterprises appear to be at each other’s throats. Increasingly, surveys find that Finance, and the business in general, don’t feel that IT adds value or aligns with business objectives, and the CFO is taking a greater decision-making role in IT. CIO magazine’s latest “State of the CIO” survey found that about one in five CIOs say IT is perceived as a cost center, a perception doubtlessly emanating from their CFOs.
The recent Discover Performance webinar “CIOs and CFOs: Can this relationship be saved?” brings the two sides of the debate together. Toby Redshaw, former Aviva CIO and currently CEO at Kevington Advisors, says that CFO involvement in IT “can be a great thing, depending on the CFO, and it can be a terrible thing.”
Redshaw says that companies that understand and implement modern IT—and do it well—will outperform the competition, at a much lower cost. “They will be the company with the gun at the knife fight,” he says. “So engaging properly with the CFO is critical; unfortunately, that’s not always the case.”
How CIOs earn a bad reputation
Sean Sloan, CFO at Dana Pacific, disagrees that IT is a cost center, calling that an outdated notion held by “dinosaur CFOs.” In the webinar, Sloan instead says it’s the CIO’s less-than-stellar track record that’s the problem.
“There’s been a historical failure in the CIO mentality,” he says. Sloan points to high-profile IT disasters—from Hershey’s $100 million loss due to an ERP/CRM implementation during Halloween more than a decade ago, to Waste Management’s more recent $100 million legal battle with SAP over a failed installation of its ERP software. “And they failed, probably on information that the CIO provided to the CFO,” he says.
Redshaw suggests that IT isn’t aligned with business because “most IT shops are not loved by the business, nor by finance.” That’s not to say there aren’t reasons: “Eighty percent of IT projects are either late, over budget, feature-deficient, or a combination thereof,” he says. “And the other 20 percent are kind of fudging it a little bit.”
Yet, in the CIO’s defense, Redshaw notes that IT is difficult and fragile: “You can build stacks out of completely approved standards that just blow up,” he says. “The arcane technical nature of what we do is radically different and contextually different than the business, so there’s always been a really big translation problem,” he adds.
Does the CFO even ‘get’ IT?
Redshaw says that CFOs can be “myopic, focused on the broader finance issues of the company, and they extend those [concerns] to IT.” As he explains it, IT is different; if a company doesn’t constantly invest in IT and keep “evergreening your estate,” it will face a huge problem. He points to a company that had been neglected and ignored by the CFO for so long that it had to spend the equivalent of 15 years’ worth of profit to bring the department up to date.
In past positions, Redshaw had to revise IT budgets for finance more than 50 times in one year, and he has seen overly bureaucratic and finance-centric CFOs make IT spend nearly impossible.
Sloan sees an increasing CFO involvement in IT spending as a natural outgrowth of four years of rough economic road. Sloan concedes that technology can improve a business’s bottom line and that “technology is the future, [but] not all technology is profitable.” He says the CFO’s involvement in IT hinges on the CIO’s motivation—is the CIO pushing an initiative because it will bring ROI, or because the technology is “cool”?
Redshaw thinks smart CIOs should view the economic downturn as a chance to boost their profile. “When the economy is tough, and visibility over the horizon has disappeared, and people are hunkering down, it’s the perfect time to go in and sell modern IT, which should be doing more for less.”
IT shops, he adds, should lighten their loads wherever possible and focus more on core competencies. Decide what can be better handled by outsourcers so the IT leadership teams can focus on what gets and keeps customers, grows profits and revenues for the company. Sloan and Redshaw agree that tapping into outside sources and mining knowledge from vendors is the first step. Sloan advises CIOs to improve their outside partnerships, ensure that implementations succeed, and bring in outside thought processes.
Teamwork and communication
Finance and IT must focus on the common goal of being partners with the business and keep their egos in check, Redshaw says. Both men say the CIO and CFO succeed when they work as a unified front, and that the two should be co-pitching big ideas to the board. The CIO, Redshaw says, needs a CFO “standing beside you nodding his head in a knowledgeable way.”
Redshaw recalls one of his most successful partnerships with finance was when, as CIO, he reported to the CFO. That dynamic can allow the CIO to become “an insider on the CFO team,” he says. Redshaw encourages CFOs to modernize … their partnership with IT. “You can hire a monkey to cut costs,” Redshaw says.
Meanwhile, CIOs must engage face-to-face on a human level with their CFOs, and educate themselves about the financial department’s challenges. CIOs have a better chance at winning support when they can explain IT investments in terms the business’s bottom-line focus understands.
“That’s the foundation for building a smart relationship with the CFO, and start taking that [relationship] to the next level,” Redshaw says.
View the entire on-demand webcast, including an insightful Q&A segment with an audience of IT and finance leaders, here.
HP Software’s Paul Muller hosts a weekly video digging into the hottest IT issues. Check out the latest episodes.
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