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By Lisa Yoon
CIOs and CFOs come from very different places, each having his or her own view of what really drives business strategy. Yet CIOs interested in getting ahead must understand that working with the CFO is inevitable; therefore, they might as well learn how to make that relationship work. A good place to start is understanding your CFO's perspective. There's a book that can help: Financial Intelligence for IT Professionals: What you really need to know about the numbers by Karen Berman and Joe Knight (Harvard Business Press).
In 2008, Stamford, CT-based Gartner Inc. reported an upward trend in the number of CIOs reporting to CFOs rather than CEOs from 2002 to 2008. If the trend continues, according to Gartner, by 2013 more CIOs will be reporting to the CFO and to the CEO. Moreover, they found more CIOs see that trend themselves.
In the same year Cambridge, MA-based Forrester Research Inc. found that the number of CIOs reporting to the CFO actually shrank in the last four years, from 25 percent of the 503 CIOs they surveyed to 18 percent by 2008.
Despite these contrary findings, it seems everyone agrees that in general, CIOs and CFOs have often had a rocky working relationship. For many CIOs, the CFO is the numbers cop, fretting about cutting costs regardless of the long-term business value of a given spending initiative.
Sweeping generalizations aside, this is where the book comes in: Understanding your CFO better can help you make better decisions for your team and make better cases for allocating funds to the IT projects that matter most. Ultimately, it can also equip you with a better understanding of the business so that you, as CIO, are in a better position to influence strategy. When Garner released its study, Gartner Executive Programs research director David Aron said in a statement, "In order for CFOs and CIOs to ally closely, they must come to a shared view of value."
"IT people need to be able to speak the language of business," write the authors in the book's preface. "And the language of business is numbers."
While more IT managers have been developing their financial savvy recently, they continue, "perceptions are hard to change, so people...may still see IT as the big spenders, unconcerned about costs and profits."
Do not worry: This is not a demanding book. Nor is it boring. It's written simply but not simplistically. It is accessible. It is practical and instructive and never forgets to explain how this information relates to you. For example, a section on ratios includes suggestions on how to translate project-management metrics into financial-performance terms. Another section on ROI acknowledges the specific intangibles of IT that are difficult to quantify, particularly the time IT projects take before showing an impact on the bottom line.
Here's what Berman and Knight want you to understand: when CFOs do the math, they are working limited information (how long a piece of equipment will last or what future interest rates will be). They must therefore make educated assumptions in order to arrive at the numbers on their financial reports. The CFO simply can't know everything. You can help finance help you by asking the right questions and even challenging-and correcting-the financial data armed with an understanding of the essentials of finance.
Note: Financial Intelligence for IT Professionals is paperback extension of Berman's and Knight's 2006 original book, Financial Intelligence: A Manager's Guide to Knowing What the Numbers Really Mean. That book was so successful that the authors followed with three editions of the book tailored specifically for HR managers, entrepreneurs, and IT managers.
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