For CFOs, the pace of technological innovation has proven to be both exciting and frustrating, often in equal measures.
“Even at the best of times, the relationship between CFOs and CIOs can be an uneasy one.” This was what Yuri Zaytsev, CIO of Swiss Re, told CFO Europe in 1999. Is it any different today?
Not exactly. Few functions have the capacity to exasperate CFOs as much as IT. In 1999, Zaytsev declared that it was “time to re-examine traditional corporate structures that require CIOs to report to CFOs.” If anything, finance’s control over IT is stronger today, with IT directors continuing to report to CFOs, assuming that a company hasn’t outsourced the IT function to a third party, reducing its interaction with finance to contractual negotiations over price and service levels.
Although CFOs remain largely responsible for IT, mastery is another matter. If he had to summarise the key theme of enterprise IT over the past ten years, Hub Vandervoort, chief technology officer for enterprise infrastructure at Progress Software, would cite the growing gap between “the velocity of the pipeline” versus “the velocity of the data refresh rate.” Put another way, Vandervoort explains, the pace of business — namely, the volume of data generated by IT-enabled processes — has increased by an order of magnitude since 1998, while the speed at which systems can collect that data has increased by only around 10% over the same time.
This, says Jan Vink, CIO of Boekhandels Groep Nederland (BGN), a €170m Dutch bookstore chain, results in the “biggest battle” facing executives when it comes to IT: balancing the need to both “operate” and “innovate.” Despite a radical technological overhaul at BGN, Vink says that close collaboration between IT and finance helps to keep operational IT costs at just over 1% of revenue, while spending of innovation accounts for just under 1%.
Two years ago, BGN launched an initiative to tag every one of the hundreds of thousands of books that pass through the chain every year with radio-frequency identification (RFID) chips. This allows automated screening of inventory, with item-level data flowing between warehouses, stores and the web. “The most dominant competitive advantage for the coming years,” Vink notes, will be “flexibility and speed.” With close to real-time visibility of its stock available to employees and customers alike, BGN believes the added agility will allow it to thrive, or at least remain relevant, in an increasingly competitive industry.
Few companies have embraced technologies like RFID — and the “service-oriented architecture” that underlies it — as enthusiastically as BGN. At many companies, the adversarial CFO-CIO relationship would make the adoption of such bleeding-edge IT “solutions” unlikely.
But at BGN, Vink is making a major effort to train employees across a variety of functions, including finance, on effective IT management. “I’m starting to educate business and information analysts, but this doesn’t mean that they will be under my responsibility,” he says. “It’s my aim to integrate them into the relevant specialist areas, pushing knowledge from IT directly into places like the finance department.”