Making a pilgrimage to the CFO's office is a common event for IT managers. Usually, you are there to convince the...
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CFO of the importance of IT, ask for funding for a system or facility, or explain why a project is over budget. But be prepared to find the CFO's office a hot spot.Managing, controlling and reporting on the financial performance of a company is challenging. Business operations have become geographically dispersed, and regulators and shareholders demand more and more corporate reporting and transparency. Even in smaller, privately held companies, people turn to the CFO to get the truth.
I suggest that you approach your CFO with a sense of history and an offer to help. For the last 50 years, most CFOs have depended on information technology to find and deliver the truth about a company's performance. In fact, IT got started in most companies as accounting applications. And in many companies, the information technology function still reports to the CFO.
Today, IT does a lot more than just help the CFO close the books; IT helps the CFO see how IT can better serve the business. At the same time, a CIO also needs to understand what the CFO is going through and his or her concerns. By responding to these concerns, the CIO becomes more credible and a better business partner. Simply put, you won't sell the CFO on supporting the development of a big system or buying new servers unless you first know what the CFO is thinking. It's the first rule of good salesmanship.
As a CIO, you need to know how to best communicate with your CFO. Here is a list of questions and suggested answers to prepare you for your next CFO pilgrimage.
IT budgets: Is the company getting business value out of our annual IT spending, and how much value will we get for new project work?
IT should not assume that its annual budget is an entitlement. It should regularly make the case for how its work improves the company's business performance. This is particularly true if you are asking for more money. Every company today is under extreme cost pressures as it strives to become more competitive. Money is not a free asset. Make a strong business case for what you are asking. If the case isn't there, don't ask.
IT projects: Will the work get done on time and on budget, and will the project deliver the business value that was the basis for its approval?
A CFO needs to understand the execution risks of what IT proposes to do. Show the CFO a detailed plan for the work and call out where the risks will occur, not just in the IT organization, but in the broader company. CFOs respect operational discipline. Are people in the company prepared to make the process changes that a new system will require? How long will it take for customers to adopt new ways of doing business? If IT has service partners, what's their record for on-time, on-budget delivery? Also address the competency of the IT organization to get the job done.
Remember that the broad perception of IT is that it always costs more and takes longer to get a project done than originally proposed, so focus on execution. And put the risks on the table. A CFO does not like walking in the dark.
Information accuracy: Is the information that my IT systems produce accurate, especially if I have to attest personally to its accuracy to regulatory authorities?
This is one of the biggest concerns that CFOs have today. Of course, the issue of accuracy goes beyond IT systems. What gets reported is also a function of the soundness of a company's business processes.
Do a company's sales reporting processes capture the truth of what's been sold? If contract work is in process, is the percentage of completion being accurately reported? Are there processes in place to check regularly on the condition of the company's capital assets? These are the questions over which CFOs lose sleep. There is no better person to observe the soundness of a company's processes than the CIO. IT knows where reporting breakdowns occur. Helping the CFO identify and solve these issues is one of the best services the CIO can perform. Good processes and good systems keep the CFO out of trouble.
In the end, you need to know more about the business of the CFO if you want the CFO to understand more about the business of IT.
James Champy is chairman of Perot Systems Corp.'s consulting practice and head of strategy for the company. He is also the author of the best-selling books Reengineering the Corporation, Reengineering Management, The Arc of Ambition and X-Engineering the Corporation.