Don Doherty spends a fair amount of time these days doing something most CFOs don’t: cheering up his IT staff. The technology team at MI Windows and Doors is eager to implement new systems, but the budget is tight at this $200 million manufacturer, which was hit hard by the recession. “When they’re not allowed to pursue what may be possible, they tend to think they’re not adding value,” the finance chief says. “On a day-to-day basis, I try to console them and realign their thought processes.”
Ironically, the IT team has never performed better, at least in terms CFOs can appreciate. The department has improved phone-system usage, renegotiated service agreements, and found many ways to apply existing technologies to current problems. “They are very much a part of finding cost savings, and that was not so much the case before,” Doherty says. Of course, the fact that the staff has been cut by half over the past couple of years may be highly motivational in that regard.
The need to align the mission of IT with that of the overall business has been a perennial challenge for both CIOs and CFOs, and efforts to do so often reveal a large perception gap between finance and technology executives.
In a survey conducted last fall by CFO Research Services, for example, there was broad disagreement over how well information systems support strategic-planning initiatives. Only 30% of the 100 finance executives agreed with the statement, “Decision makers rely on the IT function to provide the information they need to make strategic decisions,” but fully half of CIOs agreed. Similar disparities were revealed when it came to IT’s role in identifying new opportunities or business models.
In some cases, such disparate perceptions lead to palpable frustration. At a recent seminar hosted by CFO, the vice president of finance for a major bank said aloud what many only grumble about. CIOs are “always coming up with these very capital-intensive programs that are essentially faith-based initiatives,” he said. “The projects are not well supported with metrics, but [CIOs] want to run off and take the risk.”
That is a valid complaint, according to Tom DeGarmo, leader of the technology practice at PricewaterhouseCoopers. If a CIO is unable to make IT spending relevant to business strategy, the relationship with the CFO will be “very difficult,” he says.
But some finance executives caution that there is more to such misalignment than the inability of IT to “get it.” William Miller is the CFO of a subsidiary that manages the technology operations for Nationwide Insurance; in essence, he serves as a liaison between finance and IT. While the accounting profession is hundreds of years old, he notes, with a long heritage of very mature, well-understood metrics, IT is in comparative infancy, “still struggling to figure out basic norms and how to measure things with consistency.”
Miller also gives credence to IT’s common, if stereotypical, view of finance: too focused on costs, risk-averse in the extreme, and unable or unwilling to see the potential for a technology initiative to transform the company. While it is finance’s job to be skeptical, he says, CFOs should take risks to improve the business, “and IT should be able to do the same.”