Posts Tagged ‘CFO’

Who Should A CIO’s BFF Be: The CEO or The CFO?

Wednesday, October 7th, 2009
Worldcom's Bernard Ebbers Would Have Been A Bad Friend For CIOs To Have

Worldcom's Bernard Ebbers Would Have Been A Bad Friend For CIOs To Have

The times they are changing. Let’s take a moment and have a talk about one of a CIO’s key survival skills: the ability to successfully negotiate office politics. Specifically, if you could only have one best friend, who should it be: the CEO or the CFO?

Changes In The Workplace

The workplace that a CIO works in looks nothing like it did as little as 10 years ago. The changes that have happened have reshaped the boundaries of power. The CEO used to be the rock star who acted as a visionary leader. Think of Bill Gates, Tom Siebel, and Larry Ellison. However, the corporate scandals that rocked the business world at the start of the new millennium (i.e. Worldcom, Enron, etc.) has created the need for a change at the top.

Philip Tulimieri and Moshe Banai have taken a look at the that changes that have been taking place in the C-suites of major firms. They believe that a new focus on ensuring accountability by the senior executives, especially the CEO, plus the arrival of new regulations such as the Sarbanes-Oxley Act have changed who investors want to have running the company.

In the past, CFO were generally in the shadows of the CEOs – simply acting as mangers of the company’s money and trying to make sure that the company didn’t do anything too wild that they couldn’t pay for. This is all changing now.

The Arrival Of Co-Leaders Of A Company

In today’s corporate world, the balance of power is shifting. No longer is the CEO the only person running the show. Instead, the CFO is now playing a larger role – sorta a co-leader if you will.

The roles of a CEO and CFO are still different. A CEO has the responsibility of always being positive and working to move the company forward at all times. The CFO, on the other hand, is responsible for making sure that the company approaches every situation with caution and does its best to minimize the risk that it is being exposed to.

Tulimieri and Banai have made the interesting discovery that the rise of the CFO has meant that the role of the Chief Operating Officer (COO) has started to decline. The CIO is also responsible for this – that automation of much of a firm’s back office operations has reduced the need for the COO.

What’s A CIO To Do?

CIOs need to navigate these new corporate political waters very carefully. Yes, the CEO is still an important ally to have on your side; however, no longer is this enough – now you also have to be on good terms with the CFO.

One of the biggest challenges going forward will be keep both leaders happy. It’s important to realize that there will be disagreements between the CEO and CFO and that’s when the CIO needs to be most careful.

The challenge for any CIO is on which relationship should the most time should be spent. This will be different for every company. However, the CIO has the opportunity to show a great deal of value by facilitating communication between these two executives.

Final Thoughts

A CIO who can provide the information that a CEO needs in order to drive the company forward while at the same time providing the information that the CIO needs in order to measure the risk, will be seen as valuable.

The arrival of the CFO at the top of the company’s decision making structure means that being able to measure the financial value of every IT project will become even more critical. The world changes and CIOs need to make sure that they pick their corporate friends very carefully!

CIOs who can survive in the new world of company leadership and who can find a way to make friends with both the CEO and CFO will be better at finding ways to apply IT to enable the rest of the company to grow quicker, move faster, and do more.

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What We’ll Be Talking About Next Time

When you think about someone trying to make off with your company’s private data, what comes to mind? Some wily Russian hacker who sneaks into your company’s network through the backdoor? Perhaps you need to update your thinking. A recent report from Cisco revealed that the real threat is coming from insiders. What’s a CIO to do?

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Posted in leadership | No Comments »

Protecting Company Data Is How CIOs Can Make Friends With CFOs

Wednesday, July 1st, 2009

Securing A Company's Data Provides CIOs With An Opportunity To Work With The CFOData Security. There I said it. It sorta lays there like a big lump of coal and everyone in the company stands around looking at it wondering who’s responsibility it is to do something about it. Nobody, including CIOs really wants to touch it for one very simple reason: it’s a losing proposition.

How To Make Friends With Your CFO

Data security, despite being big, heavy, and ugly, always seems to end up in the CIOs lap. Since you really can’t do anything to prevent this, it sure looks like this is  a great opportunity to try to turn a liability into an asset. Ericka Chickowski over at Baseline magazine has taken a look at this issue and come up with some interesting ways to help CIOs work more closely with CFOs. It all starts with compliance. Now compliance is just about as exciting as security; however, firms are willing to spend the big bucks on making sure that they are compliant because they know that there are potentially some big financial penalties if they don’t. It is the clever CIO that sits down with his / her CFO and explains that the company’s data security program can be thought of as an extension of its compliance program. What this means is that you don’t really need a separate program and your costs should be much lower. What CFO wouldn’t be interested in hearing that?

Get Your Priorities In Order

One of the things that the CIO can learn from the compliance side of the house is that a critical first step is to make sure that you prioritize the company data that you are going to be protecting. All data is not created equal! What’s interesting here is that the importance of any single piece of information is based on two things: its value to the company and its role in keeping the company compliant. If your firm was a hospital, then clearly an electronic patient record would fall into the “top priority” bucket .

Act On Your Priorities – Not Necessarily Your Compliance

The level of protection that the IT department needs to surround a given piece of information with will depend on the result of this prioritization. I hope that you realize that this is just a fancy way of saying that there is some company data that you DON’T have to protect (or at least not very much). Just about now you’d expect me to say that you should always go all out to protect ALL of your company data that is involved in a compliance program. But I’m not going to do that. Chickowski points out that not all regulations are created equal. In fact,  some have fairly weak “teeth”. These are all things that the CIO and the CFO need to understand as they create a data protection plan / compliance program for the company. Spend those limited budget bucks to make sure that the important data is secure and then do what you can for the rest

Final Thoughts

Within the company, the CFO ALWAYS wields more power than the CIO – money talks. Folding a company’s data security program into its compliance program is a great way for a CIO to work closely with the CFO and end up saving the firm money (always a good thing) and ensuring that it is both compliant and its data is secure. In addition to providing a CIO with a reason to talk to the CFO that doesn’t involve begging for more money, an agreement about securing the company’s data can allow CIOs to apply IT to enable the rest of the company to grow quicker, move faster, and do more.

Questions For You

Does your company have separate compliance and data security programs? Does your CIO talk with the CFO about how best to secure the firm’s data? Do you prioritize your data or is it all treated as being at the same level of importance? Leave me a comment and let me know what you are thinking. Click here to get automatic updates when The Accidental Successful CIO Blog is updated.

What We’ll Be Talking About Next Time

The role of a CIO is to find ways to apply IT to enable the rest of the company to grow quicker, move faster, and do more. As part of this task a CIO needs to take steps to ensure that nothing happens that would prevent this from happening. This side of the job is not nearly as glamorous; however, it is at least as critical. What can a CIO do to ensure that nothing bad happens to a firm’s IT systems?

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Posted in security | 1 Comment »

How Can IT Get Your CFO To Give You $$$?

Thursday, December 4th, 2008
IT Departments Need The Funding That The CFO Controls

IT Departments Need The Funding That The CFO Controls

It is a sad fact of the IT world that everything requires money. No matter how cool the new technology would be to have, no matter how critical the update or change may be, you are not going to be getting or doing anything about it unless you have the funds to spend.

In the modern corporation, all funds start in the office of the Chief Financial Officer (CFO). He/she reports to the CEO and at the end of the day, no money flows in the company unless the CFO says that it can. Darn it – can’t he/she see how critical your IT project is and just give you the funding that you need?

Elizabeth Millard over at Baseline magazine took the time to talk with CFOs in order to find out what we IT’ers need to do differently. It turns out that what we have here is a failure to communicate. Specifically, we in IT have a bad habit of telling the CFO what we are trying to do and our proposals are generally not very well put together.

What we seem to be failing to do is to look at how a CFO views the world. Everyone is coming to him/her asking for funding. They need to come up with a way to quickly accept or reject a request.

If a proposal crosses their desk that has the support of the CEO, then it has a pretty good chance of getting funded. However, if the proposal that the CFO is looking at is a low priority project or if the proposal is lacking any sort of clear time line for showing results, then you can pretty much forget about it being funded.

The burden of clearly explaining what an IT project is going do in simple, straightforward business language is the responsibility of the IT department – it’s not the CFO’s responsibility to learn our language. At the end of the day, we need to be able to describe what impact on the firm’s business goals, security, customer relationships, and worker productivity is going to be.

In order to capture the CFO’s attention, we need to be able to talk to them in terms that will catch their attention. This means that every IT project needs to be able to do three things simultaneously: minimize IT staffing levels, increase customer satisfaction, and (of course) save the firm money.

In the world of corporate finance, surprises are most unwelcome. A proposal should never show up on a CFO’s desk without having been well advertised in advance. This means that you need to set up a regular set of meetings between the CFO and IT management in order to keep the CFO appraised of IT challenges and initiatives.

IT and the finance department actually have a lot in common. Both are committed to making the company successful. Areas of overlap include managing services provided by the firm, storage of company records, disaster recovery and business continuity planning, regulatory compliance and discovery initiatives, and security.

No IT project ever gets done in a flash – there are always phases to our projects. These phases need to be carefully spelled out to the CFO and the value to the firm that the project will provide at the end of each phase needs to be clearly stated.

One final thought: a great way to get a CFO to NOT approve your project is to tell the CFO that the project is urgent and then ask him / her to quickly make a decision. More often than not they will – NO!

Take your time and talk with the CFO to make sure that he/she understands how much the project will cost, what risks it comes with, and what you expect the outcome to be. This is your best path to getting the CFO to approve the IT funding that your projects so desperately need.

What is your IT department’s relationship with your CFO today? Do you have regular meetings with your CFO to keep him/her up-to-date on IT initiatives or do you surprise the CFO with funding requests? How many of your project funding requests does the CFO approve and how many does the CFO reject? Leave me a comment and let me know what you are thinking.

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Posted in CFO | 1 Comment »

What Should A CIO’s Top 10 Concerns Be Right Now?

Monday, November 17th, 2008
What Keeps The CFO Up At Night Should Also Keep The CIO Up At Night

What Keeps The CFO Up At Night Should Also Keep The CIO Up At Night

Let’s take a quick snapshot of the business world as it stands right now: uncertainties (and hope) about a new president coming in, financial markets don’t seem to be responding to stimulus programs, gas is down to $2.00 / gallon but for how long, and Paris Hilton hasn’t been hear from for most of the summer. Hmm, is this the best of times or the worst of times? What should a CIO be worrying about right now? Doing more outsourcing? Picking the best time to upgrade the company to Vista? Vitalizing more servers? NO! None of those are things that a CIO should be worrying about right now. The CIO should have a laser-like focus on the very same things that the CFO is worried about. Oh, oh. So what is the CFO worried about right now?

If you want to know what CFOs are staying up nights worrying about, then you’ve got to ask them. Thankfully for us this job has been taken care of for us by the Duke University / CFO magazine Global Business Outlook Survey. CFOs are very afraid that credit issues are going to be rippling through the supply chains that their firms use. This means that the boys and girls in finance are worried that suppliers won’t be able to supply and customers won’t be able to pay. Oh, and the CFOs’ companies may not be able to get access to the capital funds that they need also. So what are the top 10 concerns of today’s CFOs? Here they are:

CFO Top External Concerns:

  1. Consumer Demand
  2. Credit markets / interest rates
  3. Housing-market fallout
  4. Cost of fuel
  5. Cost of nonfuel commodities
  6. Upcoming change in the U.S. administration
  7. Other
  8. Financial regulation
  9. Devaluation of the U.S. dollar
  10. Environmental regulation
  11. International political stability

This of course brings up the key question: what are CIOs doing to decrease their CFO’s fears of these issues? Case in point would be the cost of fuel. Although prices have slid for now, we all know that they can go back up just as easily. The CIO should be coming up with technology based solutions to implement “smart buildings” so that office energy usage can be monitored and minimized. Tracking of fleet vehicles and optimization of delivery and pickup schedules can also result in massive savings – just look to UPS for an example of this.

As they like to say on television, but wait – there’s more! Those were just the top external concerns of CFOs. What are their top INTERNAL concerns?

CFO Top Internal, Company-Specific Concerns

  1. Cost and availability of nonfinance labor
  2. Ability to forecast results
  3. Cost of health care
  4. Supply-chain risk
  5. Other
  6. Data security
  7. Cost and availability of labor in accounting / finance
  8. Auditing

Once again, the CIO should be jumping on the ability to forecast results. This problem calls out for a technology based solution for creating, tracking, and updating forecasts. Additionally, reducing the turn-over in the IT department staff can go a long way towards minimizing hiring and training costs for the firm as a whole.

In the end, IT exists to serve the needs of the company. Yes, planning a company-wide upgrade to Vista is important; however, this is not what the CFO is worried about. In order for the CIO to have a seat at the table when the strategic direction of the company is being planned, then the CFOs top concerns need to be the CIOs top concerns.

At your company is the CIO talking with the CFO to find out what problems he thinks need to be taken care of right now? How do you think your CFO views your CIO? What steps do you think that your CIO could take to improve the relationship between the IT and finance departments? Leave a comment and let me know what you are thinking.

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Posted in CIO | No Comments »