“When I worked as a CIO, the CFO had to approve all purchasing decisions and was very cash-flow-focused,” says Zammuto. The environment was one in which Zammuto had to quantify benefits on everything, which he sometimes found unrealistic. “It is notoriously difficult to quantify benefits on various technology initiatives, such as E-mail, despite all the emphasis on ROI,” he says. Frustrated at being excluded from mainstream management decisions, Zammuto, a former CIO, resigned to take the same kind of job at Ecometry.
Stone says that at Teradyne, they talk about these costs as “balloons” and “anchors.” By focusing only on IT cost cuts—the balloons—the CFO can effectively negate enterprise cost savings the anchors might bring about.
Ups and Downs
One challenge that has long confronted CIOs centers on with whom exactly they should have a dialogue. When IT was a back-office function, typically served by a mainframe or other large computer system, CIOs didn’t talk with much of anyone. Throughout the 1990s and in the run-up to dot-com mania, IT emerged as a strategic discipline, and CIOs often found themselves reporting to the CEO. When the economy sputtered and “Internet time” was tossed on the buzzword scrap heap, CIOs found themselves reporting to CFOs. Sometimes that relationship is strong, but often it is not.
A number of CFOs, CIOs, and others say that, regardless of which way the lines fall on the organization chart, a successful partnership between the CIO and CFO is key if the elusive goal of IT/business alignment is to become a reality. That goal is further advanced when CIOs have the ability, through their own skill sets and the mandate that’s given to them by their companies (read: bosses), to approach their jobs strategically.
As a model for just such a CIO, Rosenberg points to Guy Abramo, who as executive vice president and chief strategy and information officer for Ingram Micro Inc., the world’s largest wholesale distributor of computer products, serves as chief architect for both the company’s strategic business and technology direction. (CFOs might be interested to know that before becoming CIO, Abramo headed up worldwide marketing, giving him a big-picture view that some CIOs lack.)
CFOs may be relieved to learn that the onus is not solely on them. “Today, CEOs are far more interested in how information affects the strategy of an organization than in the past,” adds Stephen P. Mader, president and CEO of executive search firm Christian & Timbers. “They want IT woven throughout the organization, and they are showing more sensitivity to CIOs, to having them work with CFOs and other senior managers.”
This tends to be truer in some industry segments than others, notably media and consumer goods. “Companies that routinely turn on a dime need to know in a hell of a hurry what’s going on in consumer trends so that managers can make quick decisions regarding, say, logistics or the supply chain. Margins can be greatly impacted,” says Mader. The input used to make those decisions has to come from both IT and finance working in concert, he says.