Chief financial officers have too much corporate power. CIOs have too little. This is especially true among global organizations, where a good CIO is a far better asset than a good CFO.
There. I've said it, and I feel better. You should start thinking it too, if not saying it aloud.
Far too often, CIOs, apparently afflicted with a surplus of humility, strive merely to be on par with CFOs. We see stories, such as the one that came out of last year's Computerworld Premier 100 IT Leaders conference, quoting CIOs in different industries arguing that companies should put their CIOs on the same level as their CFOs. And in their article "Decoding the CIO-CFO Relationship," Deloitte Consulting's Ann Senn and Kenneth Parrillo seem convinced that the perceived tighter collaboration between the two executive levels should be seen as progress for the CIO. And not without reason, if results from Optimize magazine's annual survey are true. Last year's poll showed a steady climb in the number of top IT executives reporting to the CFO -- up from 8% in 2003 to 22% in 2005. You almost get the idea that a CIO should be happy if the CFO remembers his name.
Frankly, CEOs of global businesses who put their CFOs over their CIOs are hurting their companies and often themselves. And I, for one, would think twice before investing in companies run by such short-sighted management.
One Strategist, One Implementer
My proposition is simple: The value of a CIO expands exponentially as an organization grows operations overseas. On the other hand, CFOs lose their value as a company goes international.
Generally speaking, a CFO's most prized trait is his ability to count money in ways that are most favorable for a business (and hopefully legal, too). That means CFOs are well versed in tax-avoidance strategies, revenue-recognition policies, optimized audit procedures, balance sheet preparation, cash management and other skills that are ideal for controlling costs and squeezing profits from revenue. Without skills like those, a CFO might as well be just another CPA.
However, most of those skills are based on the specific accounting rules and tax laws within a particular country. With very few exceptions, when a company moves some operations overseas, CFOs outsource those skills to locals. That's because the financial laws of each nation differ, so what works in one country doesn't necessarily work in another. If the board of directors decides that expanding abroad is essential to growth, CFOs must defer to others. Your top financial strategist becomes as much an advisee as an adviser when it comes to global issues. In other words, when he's talking about the way to manage money overseas, he's spouting secondhand information.
On the other hand, a CIO for an international company need not defer to anyone else when it comes to defining and executing a technology strategy to support the business.
Technology knowledge, unlike financial acumen, is truly international. A CIO can create business opportunities for global operations by implementing technology strategies that create or improve a worldwide supply chain, multinational product distribution system, international customer communications technology and even financial systems to support the needs of virtually any nation where a company wants to do business.
One other point: In all the major business scandals that have hit the fan in the past five years, I can't recall a single CIO who's been fired or indicted, let alone one who has copped a plea or been sent to the slammer. But CFOs at Boeing, Enron, Tyco, WorldCom and many others have all been at the center of corporate messes. Of course, most CFOs aren't crooked, and dealing with money is inherently more corrupting than tinkering with technology. But there's something else at play here.
A CIO by nature thinks about his role in a global context and, to my mind, makes a better top executive than a CFO. It's time for CIOs to shed their timidity about seeking parity with CFOs. In fact, I think it's time the CFOs started reporting to CIOs.