How the CFO’s position is evolving and why IT must be his or her responsibility
Tradition dictates that a CFO is someone tasked with managing all finance and accounting functions. I remember not too long ago that one often had to be a Certified Public Accountant to be considered for the job. That has all changed in the last 15 or so years.
The CFO position, which still stands for “Chief Financial Officer” (although I have heard references to “Chief Future Officer” and a couple more I can’t remember) has a different scope and meaning these days.
A while ago I wrote a blog article titled “CFO’s Big Picture” about how the CFO can leverage available data and technology to help the management team steer the organization on its planned course, minimizing costly mistakes that frequently occur due to lack of data, bad data, or often ill-timed data.
I recently read an article on TechTarget, titled “Should the CFO sit at the top of the IT Reporting Structure?” authored by Rob Livingstone of Rob Livingstone Advisory. In this article, the author explores why IT departments in many organizations still report to finance and not directly to the CFO. His conclusion is that in organizations where IT systems and technology are critical to the daily operation of the business and are pervasive throughout the company, IT reporting to finance may no longer be appropriate.
My observation is that Information Technology is rapidly becoming the backbone of nearly every organization, regardless of industry, company size, company culture, or geographic location. I don’t know of many business transactions, marketing activities, sales operations, manufacturing, or inventory and product fulfillment that do not involve IT. In fact, turn the IT infrastructure off and you will paralyze even the smallest company.
Since Information Technology can be innovative (when allowed by management and properly managed) and is crucial to the success of any organization, it is upper management that must be directly responsible for this function and the CFO is the position it must report to, and in my opinion not just in companies where IT is pervasive.
Areas such as Planning and Budgeting, Business Performance Management / Business Intelligence, Enterprise Resource Planning, Manufacturing Automation, Advanced Planning and Scheduling, Supply Chain Management, Human Resources and several others are now 100% dependent on Information Technology.
It is the CFO who should, through vision and a close partnership with the CEO, define the IT policy and drive the organization to excellence through embracing the right technologies and solutions to closely match the organization’s needs.