CFOs, Information, and IT

CFOs are not expected to be IT experts.

CFOs are expected, however, to know all aspects of the business, and use available information, internally and externally, to the company’s best advantage.

To be “all knowledgeable”, CFOs not only need access to the data, but more importantly, have the right information gleaned from that data on a timely basis to be able to help their company make the best decisions possible.

Since I started my working career over 20 years ago, the information landscape has certainly changed quite drastically, in a good way, to benefit those who are willing to make the right investments in time and money to get the information they need.

The challenge CFOs face today can be defined as having access to too much data and not enough information. Regular blog readers know that I put a lot of emphasis for CFO Success on their ability to manage their relationships (See Road Map to Successful CFO Relationships). When it comes to relationships they have with IT (or the CIO), CFOs face a continuous challenge.

In smaller companies, the CFO is ultimately responsible for IT, either directly, or by having IT report to him or her. When this is the case, the relationship is less of the issue, but making appropriate IT decisions can be.

In larger companies, the CFO works with the CIO/IT to make sure that they have access to the data as well as being able to get decision capable information when needed.

One thing is for certain. The CFO of today can no longer ignore IT as they may have done 20 years ago (or even 10). Today’s CFO must have access to the information they need to be able to help their business make the best decisions.

CFOs today need to be able to understand:

1. The current and ongoing changes affecting Information Technology,

2. How these changes affect where, when and how they access their information.

3. The impact of these changes on the budgets and expenditures for IT and other departments.

4. The value that these changes are supposed to bring, and how to ask the right questions to ensure the promised value is actually delivered.

As CFO, what do you need to understand better when it comes to information, and the technology that provides it?

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Comments

  1. Andrew Stokes says

    Samuel’s fourth point regarding the delivery of promised value from a given IT investment initiative is a critical one for the CFO and one that is often overlooked. Australian examples of the financial impact of failed IT projects are numerous (Ansell’s failed Oracle ERP rollout costing $13-$15m lost sales and $25 to $30m extra working capital and API’s “misplacing” more than $17 million as a result of the integration of several computer systems). They illustrate the need for a structured and disciplined approach to IT Project Governance.

    IT Project Governance is a critical part of a risk management regime for an organisation to ensure that a given IT investment delivers what was promised for the price that was anticipated/budgeted. IT Project Governance also delivers visibility to the organisations executive via the Project Steering Group (PSG) of project performance. Critically if deliverables start to slip, budgets start to blow out (for example due to unanticipated application remediation. Quick hint….be wary when reviewing your organisations Windows XP to Windows 7 migration stategy) and the project itself looks to be at risk.

    Clearly due to the financial and organisational risks associated with large IT investments the CFO has a critical role to play as part of the PSG. For the CFO to add value he/she must be familiar with the first three points Samuel makes being an understanding of the developments in IT, how those developments are distilled into your organisations IT strategy and how that will impact the organisation (both positively and negatively should something should go wrong).

    Its a fascinating area and one worthy of considerable discussion (or perhaps I just need to get out more).

    • says

      Andrew,

      I am not in a position to comment on whether you need to get out more. But if you’re asking the question… :-)

      I appreciate your input on this subject. The CFO certainly has a critical role in IT. If the CFO is the keeper of the bottom line, the road to the bottom line comes from having the right information at the right time. In a complex organization, this gets complicated.

      Successful CFOs that I have seen have one (or a small team of) Finance/IT specialist(s) helping them along. These specialists not only have the technical ability to navigate the underlying information, but have the ability to translate the strategic IT impacts, from a cost perspective, an implementation point of view, as well as an end result perspective. Successful navigation of IT in a complex organization cannot be left to chance alone. It needs to be planned and continually followed through. It also needs a smooth relationship with the CIO/IT.

      What would you recommend to continue this worthy discussion?

      Thanks again,

      Samuel

      • Andrew Stokes says

        Lets debate how the role of CFO needs to adapt as it absorbs the “Information” function of the CIO. Then lets discuss where that leaves the traditional role of CIO in the organisation.

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