What's your IT score?It isn't uncommon for CFOs to spend as much as a quarter of their time on information technology-related tasks. But that brings up an important question: Just how extensively involved should the CFO See Chief Financial Officer. be in information systems? How much do you need to know about technology to be an effective financial executive?
As an executive recruiting firm, we hear this question both from firms looking to fill CFO positions and from executives seeking to fill them. The issue is complicated by several factors: the traditional link between the CFO and corporate information processing information processing: see data processing.
Acquisition, recording, organization, retrieval, display, and dissemination of information. Today the term usually refers to computer-based operations. , the growth of information as a significant budget item, the evolving role of information in decision-making and the CFO's expanding job description.
In the past, the gulf between the large numbers of people who wanted to use the technology and the relatively small number who understood it reinforced the notion of information technology as a distinct field of expertise. At the same time, more and more enterprises found information technology taking a central role in improving business operations Business operations are those activities involved in the running of a business for the purpose of producing value for the stakeholders. Compare business processes. The outcome of business operations is the harvesting of value from assets , even creating competitive advantage. That's how the chief information officer won his own place at the senior management table. Today, roughly 40 percent of the CIOs of major firms now report to either the chief executive or the chief operating officer Chief Operating Officer (COO)
The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. .
STRIKING A BALANCE
So it's not surprising that the CFO/CIO relationship is in flux: As the CFO emerges as the point person in the strategic marshaling of the firm's resources, it's natural for him or her to also have some oversight on what information is gathered, what it costs and to what use it's put. At the same time, however, it's clearly not the best use of executive skills for the CFO to take on the CIO's job. The challenge, then, is to strike a balance. Here's where we think the boundaries should be drawn:
* The CFO first needs to understand the role that information plays in the company's strategic decision-making, and to be able to evaluate the suitability of that information. Does the company have the information it needs to grow market share, minimize inventory costs and develop winning new products? In short, how can investment in the right technology improve the bottom line?
* The CFO should then be able to measure those information needs against the technical tools available. As with other capital expenditure decisions, he or she should know enough to judge the likely return on investment - not only in the present, but in the future, as the needs of the firm change.
* CFOs don't need to know about specific technical issues relating to relating to relate prep → concernant
relating to relate prep → bezüglich +gen, mit Bezug auf +acc hardware, software, telecommunications and so forth. The pros and cons pros and cons
the advantages and disadvantages of a situation [Latin pro for + con(tra) against] of 56K frame relay A high-speed packet switching protocol used in wide area networks (WANs). Providing a granular service of up to DS3 speed (45 Mbps), it has become popular for LAN to LAN connections across remote distances, and services are offered by most major carriers. vs. a fractional T1 line, or peer-to-peer departmental networks vs. dedicated client servers, are clearly questions that fall within the bailiwick BAILIWICK. The district over which a sheriff has jurisdiction; it signifies also the same as county, the sheriff's bailiwick extending over the county.
2. of the CIO CIO: see American Federation of Labor and Congress of Industrial Organizations.
(Chief Information Officer) The executive officer in charge of information processing in an organization. and his staff. So too are the development and implementation of company-wide technology standards.
* The extent of the CFO's technology involvement will vary by industry. Financial services The examples and perspective in this article or section may not represent a worldwide view of the subject.
Please [ improve this article] or discuss the issue on the talk page. , for example, is highly information intensive. The billions of dollars that are at risk mean a technologically savvy CFO is at a premium. In other sectors, such as retail or chemicals, IT has important business implications with respect to competitiveness and optimization, but it's not yet mission-critical.
* The CFO should act as a check on IT spending on technology infrastructure expenses. He or she must focus on operational needs rather than perceived or symbolic ones, especially as CIOs begin establishing company-wide IT standards. One recent study found that only about 15 percent of large U.S. companies are making the best use of their IT capabilities. While the cost may not be a sizable share of the line budget, it's grown enough in recent years to warrant heightened and long overdue scrutiny. Ironically, given the IT battle cry of more efficiency and productivity, many companies find they're home to a tangled web A Tangled Web is a novel by L. M. Montgomery. It is one of the few books she published that was written mainly for adults.
Aunt Becky has died and in her will left a prized family heirloom to a person to be disclosed in one year's time. of legacy systems, minimally compatible platforms and redundant applications. In fact, the frenzied push for upgrades as a symbol of a firm's "commitment to the future" has only worsened the problem.
* The CFO must know how to work with advanced IT systems, which make continuous decision support possible and bring the CFO/IT connection full-circle. At more and more firms, the CFO is no longer the accountant-in-chief. Instead, he now must oversee the firm's resources - be they financial, material or human - and deploy them for maximum return. In a highly competitive economy, this critical task has made the CFO much more of a strategic player in the executive suite. Indeed, the CFO increasingly takes the lead in mergers, restructurings, divestitures and other defining transactions.
* The CFO also should be able to effectively use sophisticated data analysis that was impossible only a few years ago. Even without a redrawing of CFO responsibilities, information technology is reaching into core CFO concerns, such as asset management. Raised expectations about financial performance are a side effect of the high-flying investment climate of the 1990s. The CFO is expected to skillfully skill·ful
1. Possessing or exercising skill; expert. See Synonyms at proficient.
2. Characterized by, exhibiting, or requiring skill. ferret out Verb 1. ferret out - search and discover through persistent investigation; "She ferreted out the truth"
discover, find - make a discovery; "She found that he had lied to her"; "The story is false, so far as I can discover" opportunities in areas ranging from foreign currency to real estate, while minimizing the total cost of money for the company.
Mr. Grand leads Russell Reynolds Associates' global financial officers practice. You can reach him at (212) 351-2000 or via e-mail at email@example.com. Mr. Leon leads the firm's information systems practice. You can reach him at the same phone number or via e-mail at firstname.lastname@example.org. Both are based in New York New York, state, United States
New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , N.Y.