Thursday, December 31, 2009 | Last Updated Friday, February 12, 2010 15:05 Pacific/Honolulu
TechKnote #0401003
A New CFO for the New Year
by Donny C. Shimamoto, CPA
Donny has a BBA in Accounting and MIS. He gained a broad range of experience in financial & systems auditing, project management, application development, and business process redesign working at PricewaterhouseCoopers LLP. In 2001, he founded IntrapriseTechKnowlogies LLC—dedicated to enabling small and medium sized organizations to leverage enterprise technology and knowledge management strategies.
1 Introduction
Today’s Chief Financial Officer (CFO) must embrace technology and reapply standard skills from the CFO’s toolkit to support and manage information technology (IT) projects. This was the key message from the 5th Annual CFO IT Value Conference that was held in September 2004 in San Francisco, CA.
1.1 Embrace Technology To Its Full Potential
Today, technology is pervasive throughout an entire organization. Some IT services and applications have come to be viewed as a commodity (e.g. workstations/laptops, work processing, spreadsheets, network file sharing and printing, e-mail, etc.). However this only represents a small portion of IT’s potential value to an organization and CFOs that only focus on basic IT functions are likely heading down a path of career stagnation.
At its most basic level of potential, IT is a tool to support and automate routine and manually intensive tasks. Look further and IT is an enabler. It enables us to conduct business transactions faster and provides access to a global marketplace. It enables us to analyze larger and more complex data sets within seconds rather than days. It enables the CFO to be less of a “number cruncher”, and focus more on business processes and true financial management of an organization.
1.2 Business Process Focus is Key
With IT becoming more and more integrated throughout an organization, the CFO’s understanding of business transactions and internal controls are essential to ensuring that IT projects are capturing the right data at the right time, and that IT applications have features built-in to support the implementation and monitoring of proper internal control and compliance structures.A prime example of this refocusing of the CFO’s role is in the implementation of a structure for Sarbanes-Oakley compliance. In order to effectively manage the volume, speed, and complexity of today’s IT-enabled business processes, the CFO must embrace technologies such as business activity monitoring (BAM), data warehousing, business intelligence (BI), data mining, and business performance management (BPM).
1.3 Portfolio Management Reapplied
All CFOs are familiar with the concept of portfolio management of investments. IT should also be viewed as an investment and IT projects should be managed as a portfolio—some short term, low risk (IT infrastructure, operations and maintenance), some mid-term or moderate risk (IT projects that support the organization’s business strategy), and some longer tem or higher risk (research & development, proof-of-concept projects that are later incorporated into the business strategy).
1.4 Measure For Success
Lastly, CFOs must realign their traditional role of “bean counter” to that of measurement analyst. Measurement is the process of obtaining quantitative and qualitative data to evaluate the performance of a project or organization against a set of predefined metrics. CFOs have been doing this for decades in the form of key performance indicators (KPIs). This same approach should be applied to IT projects to diagnose a project’s progress (or lack thereof) and integrated into an organization’s risk management framework.
2 Summary
The new year brings new opportunities and challenges for all CFOs. By embracing technology and realigning the standard financial management skill set toward IT projects, CFOs can reinvent their roles and find new ways to manage risk and provide additional value to their organizations.