Tag Archives: CFO

Has the CIO become the Chief Invisible Officer?

I read an article in the Wall St Journal today all about the role of chief financial officers (CFO) in increasing investments in IT to maintain a competitive edge.

The piece refers to a Colorado company, CH2M Hill, which is cutting back on expenses like corporate events and bonuses for employees, yet it plans to boost its $100 million-a-year IT budget by upto 20% this year. In part, the money will go to fund new systems that will make it easier for workers to use a variety of mobile devices on the job.

“We’re very concerned about the economy and trying to take some measures to cut costs,” says Mike Lucki, CH2M’s chief financial officer. “But this is an investment that we need to make to stay competitive. If you don’t do it, you’re not in the game.”

The thought struck me that when I read that quote that how often do you ever hear a CFO talking about getting a competitive edge? Shouldn’t that be the language of the CEO? And, aspirationally, what the CIO should be saying?

There’s nothing in this Wall St Journal piece about the role of the CIO. That’s not a criticism of the piece at all, simply  the fact that CIOs seem to be anonymous in the corporate culture.  As the article suggests, ‘CFOs are often the executives calling the shots on tech purchases. According to research firm Gartner, for instance, 44% of IT departments report to CFOs.’ The article seems to suggest that there are IT departments – but no IT leaders. (Or at least, in this case, none that the Wall St Journal deemed noteworthy enough to speak with)

Has the CIO become the Chief Invisible Officer? Perhaps, to take a line from Mike Lucki’s quote, it’s time CIOs made a strategic investment (in their visibility) to stay competitive, because, to nick another line, “If you don’t do it, you’re not in the game.”

Or has the corporate balance of power so shifted in current times that the corporate officer that pays the piper is so clearly now calling the tune?

Is it time that CIOs started to shout more from the rooftops about their value?

Heads of finance hate big-bang IT projects

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Will companies be counting the cost of DIY IT in 2012?

By David Bicknell

I enjoyed this piece by Susan Cramm commenting on what she calls ‘DIY IT projects’ where business executives think they can meet their technology needs more efficiently by circumventing IT.  She suggests that these are almost always a bad idea, but adds that killing the project can be worse.

As she argues, ‘nobody wins in these do-it-yourself projects. The executive who sponsors the project puts his or her reputation on the line by promising outcomes dependent on technologies that he or she is ill-equipped to develop, implement, or manage. The IT executive finds him – or herself powerless, relegated to integration and support tasks without having had adequate resources and time allocated for the project. Meanwhile, the CFO watches dollars flying out the window as the budget for ill-conceived and poorly executed initiatives becomes a moving target.’

With managing consumerisation arguably the hottest topic for IT organisations, I wonder how many business (IT) projects that don’t effectively involve IT will turn out by the end of the year to have been failed projects that in today’s austere times, their companies can ill afford.

ConsumerizeIT

Why corporate sustainability strategy is now part of the CFO’s role

By David Bicknell

The organisational politics around sustainability are an ongoing issue. So far the need for a  sustainability strategy has touched those responsible for corporate social responsibility (CSR),  marketing (because of the brand and reputation implications of Carbon Reduction Commitment (CRC) league tables) and IT and Facilities who are having to manage and measure energy usage.

Now, an Ernst & Young report recommends, it is the CFO’s turn to pick up the baton.  As this piece suggests, sustainability trends are shifting the role of the CFO in three key areas:

  • Investor relations:  “Shareholders are speaking much louder and much more stridently than they did just a few years ago.  During the 2011 proxy season, 40 percent of shareholder resolutions were related to ESG issues. And over a quarter of ESG-related resolutions gained a 30 percent “Yes” vote, which Ernst & Young describes as a critical threshold (other observers say anywhere from a 10 to 20 percent vote can motivate companies to rethink their policies).  Mutual fund companies are paying more attention to sustainability related issues, and the rating companies (which have received, ahem, a fair bit of scrutiny lately) are directing more focus towards ESG matters as well.  All this leads to a shift in the duties of companies’ investors relations staffs; and CFOs, according to Ernst & Young, will lend more than a few hands with the demands placed on IR departments.
  • External reporting:  More than 3000 multinationals issue sustainability (or CSR or ESG) reports, and many of these companies now provide more than static or trite glossy PDFs.  Companies including UPS, Timberland, and Microsoft are raising the bar in offering frankness while encouraging increased stakeholder engagement.  To that end, more companies are having their sustainability reporting audited by third parties (such as the Carbon Disclosure Project for carbon emissions performance).  And that experience with third party performance falls into the CFO’s lap because they know how to balance the challenges and opportunities that arise from third-party verification.
  • Operational controllership and financial risk management:  Early last year, the Securities and Exchange Commission issued guidelines to companies on how to disclose risks possibly related to climate change.  Carbon data, and more frequently, water data, is becoming financial data because of these resources increasing price.  What was once tangential to the costs of running businesses has and will be central to the financial risks that come when running a company.  Whether evaluating the costs of large capital projects or ascertaining the reliability of sustainability data, CFOs and the departments they head will be careful when ensuring that all this data is accurate.”

Admittedly, currently this is probably a more US-focused development. But then it’s probably only a matter of time before CFOs here have to start considering the sustainability implications of their job, if they are not doing so already.

Here are five immediate actions CFOs can take to enhance corporate value through sustainability:

• Actively pursue a sustainability and reporting program.
• Ensure that those responsible for sustainability matters do not operate in isolation from the rest of the enterprise — especially the finance function.
• Enhance dialogue with shareholders and improve disclosure in key areas, particularly those related to social and environmental issues.
• Ensure that directors’ skills are relevant to the chief areas of stakeholder concern, including risk management tied to social and environmental matters.
• Consider using nontraditional performance metrics, including those related to environmental/sustainability issues.

Ernst & Young report: How Sustainability has Expanded the CFO’s Role