Bean counting cyber chiefs

Bean counting cyber chiefs

It is a truism that ICT strategies should be closely aligned with the objectives of the business. It might therefore seem a good idea, particularly in a small organization, to combine the functions of CIO and CFO. But is this asking one person to do too much, or giving one person too much control, losing the "checks and balances" along the way?

For Ian Caulfield, group finance and IS manager at West Auckland Trust Services (WATS), this is not the case. He points out forward looking financial managers in New Zealand are finding themselves drawn to the IT space as an important element in "making the business better". This follows a similar trend that has been noted internationally -- implying that conventional CIOs who lack finance skills and concentrate on technology had better look to their laurels.

A financial background puts a CIO in a good position to assemble information systems to the long-term benefit of the business, says Caulfield. Experience in finance gives a CIO an enhanced ability to conduct "due diligence" on a potential supplier of IT products or services -- saving the business from a bad choice -- and a better ability to judge the total cost of ownership of an IT solution in the long-term, he suggests.

The IT manager's strengths, by contrast, are in "integration", he says, in finding appropriate elements of technology and fitting them together.

Caulfield came across from the ranks of accountancy to ICT. He joined the Waitakere Trust as an accountant six years ago. With the merger of that trust and the Portage Trust, he became financial controller of the larger group. The trusts, which operate local liquor outlets, had a turnover of about NZ$30 million (US$21.4 million) a year then and the combined entity has since grown further. A few years ago, with the growth of the merged trust's IT resources, Caulfield took on the IT manager's role, becoming group finance and information services manager.

He sees the pure CFO and the pure CIO as "two different types" with distinct if related approaches. "The CFO tends to concentrate on the company's investments and budgets." The CFO responds to pressure for compliance with statutory record-keeping and reporting requirements, seeks prompt and competent reporting and strives for accuracy, with a view to possible "legal issues".

The CIO's key ability lies in "presenting information so the users in the organization understand it" - whether it is the day-to-day presentation of data through the information system or a formal presentation of a proposed new project to top-level managers.

"They are similar but different points of view, and I see the benefits from integration of the two roles," he says. The CFO view might, in an organization like WATS, extend from the point-of-sale through to the accounting system and record-keeping compliance, but still lack the forward view of what the business needs to know and to do to continue viably into the future.

The latter, he says, was the stimulus for adding a data warehouse and business intelligence suite, from the US company Proclarity, of Boise, Idaho.

"If you start with the picture at both levels: Keeping the business's assets secure, and on the other side looking at what you should be doing and designing architecture [for such growth and change], then you have a more complete picture."

Often the CIO and CFO views are in conflict, he acknowledges. A project whose benefits appear obvious to the CIO might arouse doubts from the financial point of view. "When you have one person in charge of both, then you've already battled with yourself before you bring the idea to top management or the board. I see more financial controllers and manager moving into the IT space these days," Caulfield says. The "old-style accountants" whose focus is on the balance sheet might have to be dragged protesting into an awareness of IT, but it will come, even for them. While others less focused on statutory compliance and more so on "making the business better", will make the shift more easily.

In the smaller business there is typically little cost-justification for two separate roles and this makes the merger more persuasive. A business needs accounting skills first, so the accountant will shift towards IT more often than the reverse.

Traditional CIOs have at times been in conflict with those they are inclined to dismiss as "the bean-counters" and this makes them interesting to talk to at industry gatherings, he says. "A lot of those CIOs bracket everyone with an accountancy background as an 'old-style' thinker," but this is wrong, he says. "More and more accountants understand the CIO point of view."

A CIO/CFO should be able to focus on strategy, so if his or her background is predominantly financial, there should be "good technical people" in place in the IT department to do the hands-on work, Caulfield says. Since WATS began dealing with a greater range of software vendors, a specialist IT manager has been recruited, who reports to Caulfield.

"A big influence in the choice of such people is that they should understand my skills," he says.

The more discriminating awareness of the cost and longevity of IT solutions and the proper expertise of the vendors have influenced the shape of WATS' IT, says Caulfield. "We've moved from a single supplier to specialized vendors; I don't want our ERP supplier to influence our business intelligence direction."

However, suppliers from these different perspectives should communicate and cooperate and he sees WATS as an influence in this. "We are making vendors form partnerships with each other." WATS could become a reference site where this integration can be seen to work productively, he says.

Business and ICT analysts agree with the CIO/CFOs that financial awareness is a plus and a growing trend.

Mary Ann Maxwell, head of executive programs at Gartner, says a CIO must lead like a CEO, analyze like a CFO and execute like a chief operating officer. For ICT to move from a cost to a value proposition, departmental competencies -- including those of CIO -- must shift from technical to business, she says, and CIOs must realize their success will be measured by their ability to understand and contribute to the business.

Working IT unit

Parke Pittar, of Port Nelson, also emphasizes the value of having "very good technical people" under him. Like Caulfield, he initially had finance responsibilities, but Pittar has also been responsible for operations. From these dual roles he was subsequently given responsibility for IT. He is also the company secretary.

"I have worked in a number of ports and also in non-port environments," he says, and he has observed how the IT unit works in a range of organizations. If you take a purely IT-centered approach, he says, staff and customers can get "a purely technical solution" that is hard for them to manage and does not really meet the business's needs.

A CIO should go back to the business processes and once those are understood, look at how IT fits in. "Good solutions are usually business oriented. I've worked in all parts of the port environment and one thing I've learned is that where users [with little IT knowledge] are involved, you have to make things straightforward. The system must have an easy interface." The dual finance and IT skill sets "are valuable in terms of understanding what IT can provide as an enabler; the ability to match financial and nonfinancial information," Pittar says. "In a lot of companies, you get operational and purely financial reports separately.

"With the help of IT, we should be aiming for high-quality and rich reports that draw both together." Each activity done in the port has its consequences for the financial position. Having all three (operational, financial and IT) perspectives, the well-rounded CIO will use IT tools to bring out this connection and ensure that everyone in the company remains aware of it.

Pittar joined Port Nelson in 2004 and set about modernizing a DOS-based financial system. "Information was locked in people's heads and some of them were getting on a bit."

It was crucial that such institutional knowledge be encoded permanently in an upgraded and more user-friendly IT system.

On the operational systems side, the port had a Jade-based cargo terminal system, "but we needed a marine system to complement that".

In general, the IT spend in companies is a major element, and directors need to be persuaded that further expenditure will produce results, says Pittar.

"Around the board table, you have to be able to translate technology into plain language," he says. "I'm not a technical IT person. I have two very good guys under me, who deal with the detailed technical side and they have to translate it to me. If I can understand it the other executives will. I think if something's put together by consultants, it will be technical in its flavor; and executives may not understand. I'm the first-level acid test.

"At a business level I do communicate. At a technical level I do struggle. I have those two guys who are my eyes and ears [at IT technical gatherings]."

Is the joint CFO-CIO role becoming more common? "It wouldn't surprise me," he says. "It depends on the size of the organization. When an organization gets large, the CIO and CFO tend to separate" but still have the critical mass for productive cross-fertilization. There are small-to-medium enterprises where the separate roles do not communicate as well, but the size of the company is such that they could be collapsed into one, he says.

Does his lack of specialist ICT training put him at a disadvantage? "I don't think so," he states. "Some companies have CFOs who don't have a formal accountancy qualification, so I don't see why an ICT manager should necessarily have to have specialist qualifications in that field."

Wider world view

Alison Molloy, general manager of finance and information systems at the Plunket Society, thinks the technical emphasis among CIOs and IT managers in general is broadening, towards a greater awareness of the relevant use of resources in an economical way that directly helps the business.

"I was at a conference [of CIOs] last year and comparing it to the same event two years before, the people there seemed to have a much wider world view."

This, she suggests, could well be user-driven. The users are better educated and more experienced in the use of computers and less in awe of computer experts.

"They search out information and buy goods online and they demand practical, technology-generated efficiency from those services and from their own organization."

Molloy qualified in management and accountancy and held a number of positions in health and education-related organizations before Plunket. This gave her an awareness of the needs of frontline staff in organizations with limited funding. They and their managers are acutely aware that every dollar spent on inefficient or unnecessarily elaborate technology, is a dollar not spent on the children and families who are their clients and the reason for their jobs.

A close connection between finance and information systems is therefore particularly appropriate. "If there were two of me -- an accountant and an IS manager -- there would probably be more conflict. The frontline people see both [finance and IS] as 'no-people'," she says. "Having to get past 'no' twice would be a lot harder on them."

As it is, "the staff -- nurses being equipped with cell phones is a simple example -- know that I have an eye to the most efficient use of those resources".

She acknowledges she is "largely self-taught" in ICT, though she has done a tertiary-level course. "My experience is evolving and practical, rather than coming from a big theoretical background. Technology is a tool for the business, not a business in itself."

Many technology experts are caught up in "the fabulousness of the technology" and that, particularly, is the way some technology vendors' representatives come across. Having recently bought a CRM system, "We put the focus on meeting business needs and easing the situation of our clients. The vendors would tell us theirs was just the greatest technology, and we kept having to tell them that didn't necessarily meet our business drivers -- or help us bring about better parents, stronger communities and healthier children."

The Plunket network has eight regions and a total of 26 offices but they are only now beginning to be digitally linked. Each has a LAN and the three Auckland offices and the Wellington head office have only recently been linked with a wide-area network that will in due course be extended to the other centers.

It is very much a Microsoft shop, with Navision financials, a central management information system provided by an Australian company and a Jade-based application for maintaining client data.

Knowledge and experience of finance supports the decisions made in IT, Molloy says "both are logical fields, though the challenges are different. They both involve recognizing patterns, managing change and the ability to think strategically."

Like Caulfield and Pittar, she has technical specialists doing the practical work of ICT and reporting to her. "A big challenge is to get the nurses to participate in [technology evolution]; they often see the technical person as interfering with their duties. It's a challenge to find a place where they agree what's needed."

Molloy will shortly be moving from Plunket, "into something involving finance and change management"; though she sees her next job as still having an ICT component.

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