The Bank That Said No to IT

If only the federal government would replace financial-projection software with personal accountability, writes a reader. More letters to the editor: a celebration of innovation; does Amazon deserve praise?

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CFO IT welcomes your letters. Send them to: The Editor, CFO IT, 253 Summer St., Boston, MA 02210.

E-mail us at Scott@cfo.com. You can also contact a specific author by clicking on his or her byline at the beginning of any article.

Please include your full name, title, company name, address, and telephone number. Letters are subject to editing for clarity and length.

As a follow-up to a story we ran in the Spring issue on the tension that often exists between the finance and IT departments (“The Great Divide“), we welcome feedback from readers regarding healthy working relationships between CFOs and CIOs. Please follow the guidelines above. We will feature a number of case studies in future issues.

I must say that I truly enjoyed reading your article “There’s No ‘IT’ in ‘Thrift’ ” (Spring). It is so refreshing to read about any organization, especially such a successful one, that goes against the accepted grain and does so with excellence. Your article reminds me of [Warren] Buffett and his [similar] penchant for going against the grain, doing only those things he really understands.

Now if we could just get our federal government to adopt these practices. For example, get rid of the “gotta-spend” budgets and replace financial-projection software with personal accountability. Or what about the Department of Education? I wonder just how much students could accomplish by replacing technology with chalkboards and books? Oh my, I’m beginning to fantasize.

Would you consider identifying more companies like Washington Federal and sharing them with us? I would love to read more about such opportunities. Great article!

Dennis Bolay
Via E-mail

An Innovation Celebration

I enjoyed your article titled “Innovators’ (Other) Dilemma” (Browser, Spring). The issues it described are particularly challenging within big companies, like Siemens, that have a long history and well-established products. We are [always] looking for ways to discover disruptive innovations and introduce new solutions into our portfolio. We have taken to heart the lessons in Clayton Christensen’s famous book The Innovator’s Dilemma and the subsequent (with Michael E. Raynor) The Innovator’s Solution, and have gotten a good response from analysts regarding how those ideas shape our strategy. Thanks for covering this important topic.

Ruediger Muehlhausen
Siemens AG
Via E-mail

Does Amazon Deserve Praise?

If you wanted to write about the IT side of Amazon (“Amazon Finally Clicks,” Spring) and leave it there, then fine. However, to make asinine comments about its financial performance in glowing terms is wrong. For a company to be in business 10 years and only earn $32 million, or 8 cents per share, on sales of approximately $4.8 billion is not brilliance but failure. All you are doing is adding to the Wall Street public-relations farce on Amazon, which is a big disservice to your readers. I would expect more from your magazine. Does Anthony Noto of Goldman Sachs [quoted in the article] ever stop to think that perhaps free cash flow is up because sales are up? The higher the sales, the greater the free cash flow but not necessarily profit. Amazon collects its money in two to three days after a sale because customers pay with credit cards, but does not pay its suppliers for 90 days or more; therefore, free cash flow is up, especially in the fourth quarter of the year. Why doesn’t he mention that to obtain these higher sales they had to give up some of their gross margins, which is why profits were far lower than they should have been? I do not own Amazon stock, nor have I sold it short, but I object to professional magazines becoming shills for Wall Street. We seem to be returning to the go-go days of the late ’90s with wild Wall Street analysts again. Amazon stock is owned by pure speculators, not investors.

Don Gonsalves
Retired CFO
Via E-mail

Editor’s note:

The article made it clear that despite the atypically good news on the financial front, Amazon faces an uncertain future. But a company’s profit margins don’t need to be huge in order for it to offer lessons to others. Some of those lessons, as you allude, may prove to be in what not to do, but we feel confident that Amazon deserves both attention and praise, not only for its IT strategy but for its business strategy as well.

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