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What the CFO Needs to Know About IT


The role of IT has shifted dramatically in retail in the past 10-15 years, from a simple automation tool to an enabler of competitive advantage and business transformation. At the same time, the role of the CFO in IT has shifted quite a bit as well, and some top finance executives may feel a little uncertain about their place in the new retail IT landscape.

Brian Kilcourse and Paula Rosenblum, managing partners at RSR Research who have both previously served as retail CIOs, have some advice for today’s retail CFO.

The CFO has had on-and-off direct control of the IT department in the past two decades, and according to Kilcourse, the balance of power is shifting back to the CIO.

“In the past, the CFO usually had direct control over IT, because general accounting, AP and AR, along with payroll, were the first processes to be automated,” explained Kilcourse. “As IT’s influence spread, retailers established the role of CIO, and by the early 1990s it was quite common to have a CIO reporting to the CEO. “

Around the turn of the century, focus on Y2K and Sarbanes-Oxley compliance, followed by PCI compliance efforts, placed IT back under the control of the CFO. However, with rekindled emphasis on the selling side of retail operations, Kilcourse says many CIOs are once again directly reporting to the CEO.

“From RSR’s perspective, this makes sense: the CFO manages the ‘money’ asset, while the CIO manages the ‘information’ asset.” Kilcourse said.

Get involved

The rising importance of the CIO does not mean CFOs should step away from the IT function. On the contrary, their active involvement is more crucial than ever.

“I’d like to see the CFO involved in more cloud compared to on-premise solution decisions,” said Rosenblum. “Again, based on our data, I’d also like to see them involved in financing decisions. Too often, retailers tell us they can’t afford the capital associated with new technologies, and I tend to always wonder, ‘Why don’t they do a capital lease to defer the cash outlay?’ This is an area where the CFO can be an ally and lend support.”

Rosenblum also advised CFOs to consider revenue-generating IT projects as well as cost-saving ones, and to pay attention to management of inventory based on demand forecasts.

Final thoughts

Rosenblum had a couple final pieces of advice for CFOs wanting to maximize the effectiveness of their involvement in IT.

“The CFO needs to work with the CIO as a businessperson with a specialty, rather than as a plumber who happens to work in the executive offices,” stated Rosenblum. “Also a smart CFO will look at organizational charts to ensure that there is a rationalization of the IT structure. A CFO should ask if there is a reason why a business unit, such as marketing, has its own IT group.”

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