THESE DAYS being a tech-savvy finance director is pretty much the norm. Finance functions are harnessing the power of Big Data through better analytics, management information and business intelligence systems, and, in practice, CIOs tend to report to the CFO, unless ofcourse the CFO already holds the IT remit.
The idea of uniting the two roles is an appealing one for companies which often can find the two departments struggling against each other over jurisdiction, spend and implementation of back office systems. Marrying the two roles together, then, may help the two departments sing from the same hymn sheet. More often than not it is the CFO that will take on the dual brief. But can it work the other way round?
It’s not something that seems immediately obvious given the tension that exists between IT and finance, but CIOs are starting to muscle in on the finance function and make the jump to CFO.
Nintendo’s Ingvar Petursson and World Telecom Group’s Jeremy Hopkins are cases in point [See boxes]. Both come from a tech-orientated background – Hopkins as a systems analyst at Bank of America, while Petursson has spent the bulk of his career in CIO roles – and both now run a dual CFO/CIO brief.
“CIOs becoming CFOs will likely understand technology, supply chain management, financial management and communication, and it can be a natural step,” says Chris Pick, president of the Technology Business Management Council where he heads up a network of 1,300 CIOs.
Pick, who is als CMO at financial software producers Apptio, adds CIOs are more likely to be handed a finance mandate where the IT spend is high – typically in technology, government, healthcare and financial services.
“Running an IT function requires financial discipline and cost transparency,” Pick explains. “It gives them a leg up in explaining any shared service to the business.”
However, a lack of technical accounting knowledge is a serious impediment to IT bods with finance aspirations, says Karen Young, director of senior finance at recruitment firm Hays.
“Any CIO looking to make that move would need to evidence they’re financially proficient and familiar with legal and institutional requirements,” she says. “But they may be motivated to become CFO if they were looking to later become CEO.”
Nevertheless, the roles have merged in public and not-for-profit sectors with the emergence of director of resources roles, which tend to occur at regional level, with examples such as Merseyside Police and Lancashire Constabulary.
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“CFOs and CIOs are working closer together, but it may be too early to describe it as a trend. The CFO’s position has strengthened in the board room following the economic slowdown, and any amalgamation of the role would likely be an internal hire due to a build-up of trust. I’d be surprised to see it done externally,” Young explains.
When asked about the impediment seen by Young of lacking the technical knowledge required of CFOs, Pick notes responsibility is delegated to financial controllers while the CFO learns the regulations.
“In many cases, if you’re not a trained accountant and you understand disciplines like activity-based costing or cost accounting, it can be very difficult,” he explains. “But it depends what the organisation is all about. If they have a strong [financial] controller, you have one aspect of it. It depends what the transformation is of the organisation.”
However, Young believes the practice of moving CIOs to CFO will be restricted to technological and digital sectors, where IT use is very heavy and makes up the bulk of the company’s expenditure. Instead, she suggests, most will simply ensure IT and finance are more closely tied and endeavour to have a greater understanding of their function.
“There is a tension between the two departments, but there is a meeting of minds and I expect that to strengthen,” she says. ?
BOX: Ingvar Petursson, senior vice president of technology and finance, Nintendo
Icelander Petursson started out building economics analysis models for bankers, writing programming languages to help make investment banking more scientific.
He has spent the bulk of his career in CIO roles, most recently at Expedia and previously at AT&T Wireless, Corbis Corporation and The Regence Group. But his present role with Nintendo – which he has occupied since 2010 – not only sees him reprise his IT responsibility, but also takes on a finance and risk management element as he modernises the video gaming giant’s internal structure.
BOX: Jeremy Hopkins, CFO/CIO, World Telecom Group
Having risen through the finance ranks with Bank of America, taking in both systems and finance posts, Hopkins now operates as both CIO and CFO for Los Angeles-based World Telecom Group – a role he has occupied since 2010.
The wide-ranging role sees Hopkins managing all financial and technological matters, reporting directly to CEO, Vince Bradley. Alongside overseeing the finance function, Hopkins manages systems analysis, data modelling, centralised call centre operations, distributed retail and wholesale/broker-based business.