Google's Wall Street CFO hire underscores value of CIO-CFO alliance

Google is the latest of the tech giants hiring Wall Street hotshots. The CIO lesson? Partner with your CFO if you want to get ahead. Also in Searchlight: Facebook turns Messenger into an ecosystem; Twitter faces a gender bias lawsuit.

Google announced this week that Wall Street bigwig Ruth Porat will be its new CFO. The move follows the example of other Silicon Valley tech companies that have recently recruited high-powered finance talent as they target new markets and expand relations with various investors. One takeaway for CIOs? This may be as good a time as ever to reflect on your relationship with your CFO.

Porat, who will be replacing Patrick Pichette on May 26, joined Morgan Stanley in 1987 and became its CFO in 2010. Among her many achievements during her tenure there was leading the New York-based investment firm's technology financing rounds, including for Amazon and eBay. The hire is timely, according to Business Insider's Jillian D'Onfro, given recent investor concerns about Google's slowing revenue growth.

The hire of Porat, dubbed the "most powerful woman in Wall Street," speaks to the growing need among Silicon Valley technology giants for "managerial legitimacy," according to Bloomberg View tech columnist Katie Benner. "Companies like Google -- which were still relatively new 15 years ago -- are now elder statespeople that have to pursue much more sophisticated dealings with big investors and public policymakers," Benner writes. And more and more of these companies are looking to the East Coast to flesh out their C-suites -- and are willing to pay them handsomely for their expertise. Wall Street superstars that have made the move to high-tech firms include former Goldman Sachs investment banker Anthony Noto to the CFO slot at Twitter last year, and the same firm's former analyst Sarah Friar to Square as the payment company's CFO.

While Google and other tech companies are hiring high-powered CFOs for their financial expertise, recent research suggests that the CFO role in technology decisions at companies of all sizes is growing. According to Gartner's June 2014 survey of about 200 senior financial executives, CFOs now authorize 29% of technology decisions, compared with 24% in 2013. However, only 12% partnered with their CIOs to make such investments.

Part of the reason for the lack of collaboration could be due to the CFO's perception of IT. Only 5% of the survey's respondents said working with IT is a source of competitive advantage, and a dismaying 0% viewed their IT organizations as transformational. Moreover, less than a third of those surveyed (28%) professed to be "advocates of IT." The data suggests that although CFOs understand the importance of technology in driving business growth, they don't trust or engage with CIOs to make investments in that area.

Invest in a CIO-CFO relationship

While a CFO-CIO collaboration is certainly a two-way street, the onus is on CIOs to sit down with their CFOs and regain their trust, writes Khalid Kark, director of Deloitte's CIO Program, on Deloitte University Press. He offers CIOs the following talking points:

  • Risk: Shrewd CIOs should think like venture capitalists when it comes to making technology decisions and balance the risks and rewards of investments. But be careful: CFOs and other business leaders aren't necessarily aware of the technology risks and rewards, Kark says. CIOs need to take the time to educate them on the strategy behind the decisions and get them to understand that "some bets pay off while others don't," he writes.
  • Valuation: CFOs often feel they're unsuited to the task of evaluating technology investments, says Kark. "CFOs frequently ask me, 'How do I know if I am overinvesting or underinvesting in IT?'" CIOs must help CFOs and business partners come up with a methodology to evaluate these investments, Kark urges.
  • Governance: Like venture funds, strategic technology investments need governance and accountability, Kark writes. Incorporating the CFO's nontechnology perspective into governance gives these initiatives transparency and credibility, he says.
  • Disruptors: CIOs are responsible for identifying potential disruptors that can have an impact on their business, be they new technologies, scientific breakthroughs or regulatory changes. The CFO can help CIOs understand and articulate the impact of these disruptors to your business, Kark says.

CIO news roundup for week of March 23

Here are more technology headlines from the week:

  • Facebook's F8 developer conference kicked off this week. Among the major happenings: Messenger is now a platform on which businesses can interact with their customers; the Oculus Rift virtual reality headset takes users to Jurassic Park; and Facebook talks Web access via drones.
  • Another tech giant faces heat for gender discrimination: A former Twitter female software engineer is suing the social network for practicing a promotion process that favors men, Reuters reports. Meanwhile, Ellen Pao's suit against Kleiner Perkins moves to jury deliberation.
  • Have a Gmail account? You might soon be able to pay your bills online with Google's Pony Express service, which allows users to receive bills in their email inbox -- you just have to give Google access to personal information such as your credit card number.
  • Jay-Z is getting into the music streaming business, but make no mistake -- he isn't looking to compete with the likes of Spotify and Rdio. TIDAL, at $19.99 a month, "is not for everybody," says CEO Andy Chen.

Check out our previous Searchlight roundups on Facebook Messenger's peer-to-peer tool and business use cases for the Apple Watch.

Next Steps

Get tips from LevelUp's CFO on how to meet the security demands of digital data, and find out what your CFO peers want to know about security and risk management. Then, head over to sister site SearchFinancialApplications to get advice on how your CFO can become a trusted business partner.

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