When the CIO is also the CFO

IT exec Jeremy Hopkins has a bit more on his plate these days than some of his colleagues in high tech. Hopkins is the CIO at World Telecom Group in Malibu, Calif., a job that keeps him hopping.

And he's also the CFO.

It's an unusual situation, but one Hopkins feels was necessary to quickly get the company up to speed as it grew toward $10 million in annual revenue without a clear technology budget or the type of IT strategy common at more mature companies.

"It was clear that there really had to be a lot of coordination and communication between the financial model and the data model," says Hopkins, who was hired as part of a push by leadership to get the company to the next level of revenue and growth. "For a company that needs to undergo rapid change quickly, this is a good fit."

Executive summary

The dual CIO-CFO: Benefits and drawbacks in a nutshell

Like other executives who find themselves carrying a dual CIO-CFO title, Hopkins fell into the position through an unusual set of circumstances. Before taking on the CFO-CIO job in July of 2010, he had worked as a consultant with World Telecom for a year, advising officials on tech issues because the company didn't have an IT leader at the time.

Then the CFO resigned. Hopkins, who has an MBA and some finance experience, stepped up and proposed the joint position as a way to move the company forward quickly.

The dual appointment gives him flexibility to maneuver fast and make decisions without getting bogged down by the "necessary investments vs. fiscal constraint" debate that often arises between CIOs and CFOs, Hopkins says.

His dual position is rare but not unique, industry watchers say.

Other organizations that have merged the two jobs into one find that the combined position can offer important benefits, provided it fits the business's circumstances.

"This is a growing trend, and I think it's a positive step," declares Ron Box, CFO and CIO at Joe Money Machinery Co., a Birmingham, Ala.-based company that sells and rents construction equipment. Box has put in the time to make that assessment: He has held both positions simultaneously for five years.

Bullish as he is on the arrangement, Box acknowledges that he didn't set out to be a dual-title holder. He started with the company in the finance department 16 years ago and moved up to the CFO spot after about six years.

Jim Money, vice president, general manager and director at the family-owned enterprise, says that he and other leaders came to believe several years ago that the company was lagging when it came to technology.

The IT department was able to keep the computers humming, but it didn't have the wherewithal to focus on strategy. "There was no one who could look at a three- or five-year business plan and say, 'These are the IT resources I think we should include in our projects,'" says Box.

So Joe Money's leaders created the CIO job, and Box took on that position's duties in addition to his existing CFO responsibilities. Box and other company leaders decided that a combined role was the right choice because the company is small (about 70 employees) and has limited financial resources, which can decline during the winter months when construction work slows down.

As Box explains it, Joe Money Machinery needed the strategic thinking that a CIO brings but it didn't need someone doing that full time.

Executive summary

The dual CIO-CFO: Benefits and drawbacks in a nutshell

Box had studied computer engineering while earning a bachelor's degree in business, and he had some experience with technology, but he admits that he still faced a learning curve.

To overcome that, he says, "I set about training myself to become a CIO as if that were my only job."

That training included a good deal of independent study -- reading up on IT management and technology trends in newsletters, books and magazines -- as well as work toward certifications, such as the American Institute of Certified Public Accountants' Certified Information Technology Professional (CITP) credential. His goal? To be able to completely understand any IT project before he approved money for it.

Today, Box has six IT staffers who report directly to him; one is the IT manager who ran operations prior to the creation of the CIO job. The wide-angle view of the company afforded by his dual role helps him craft better solutions, he says.

As CFO, he had been frustrated that his company was unable to recoup costs of rental equipment that was broken when customers returned it, because there was no way to prove that the customer was responsible for the damage. As CIO, Box was able to implement a document-retention system that stores before and after photos of rental equipment along with details about the equipment's condition. The system provides a time stamp that's admissible in court.

The dual CIO-CFO position: Benefits and drawbacks

Benefits

* No more arguments over funding. Jack Wilhelm, the CIO and CFO at Emerson Hospital, says there's never enough money to fund everything on the wish list. But as CIO he's able to prioritize what's needed and as CFO he's able to fund it -- without debate.

* Better insight into the organization. Because CFOs must have their eyes on every department, they're able to carry that insight over to the tech department and better align IT with business needs, says Ron Box, CFO-CIO at Joe Money Machinery Co.

* Better understanding of the company's current and future economic situation. "You have a connection to the financials that other CIOs don't have," says Jeremy Hopkins, CFO-CIO at World Telecom Group, and that allows for better short- and long-term tech planning.

Drawbacks

* Inadequate vetting of IT spending requests. Execs caution that CFO-CIOs might be tempted to approve IT projects and spending requests without having them undergo the same level of scrutiny that they would get if Finance and IT were headed by two different people.

* Limited time for each duty. Wilhelm says that even working extra hours doesn't always give him enough time to fulfill all of the responsibilities of both of his jobs. That means he misses out on some activities, such as IT conferences or seminars on the latest technologies.

* A lack of experience in one of the roles. In building a career, executives typically come up through the ranks of a specific discipline; it's rare to jump back and forth between different departments like Finance and IT. Box made up for his limited IT background by earning Certified Information Technology Professional (CITP) and Certified Information Systems Security Professional (CISSP) credentials. People with heavy tech backgrounds might have even steeper learning curves on the financial side, Wilhelm says, since they'd have to become familiar with things like accounting standards and legal requirements.

* Limited opportunities to be on bleeding edge of IT. A CFO-CIO's chances of being able to take on the extra work that comes with being an early adopter of new technology are low, since the dual job already has extra responsibilities of its own, Box says.

"So now when [damaged equipment] comes back, we can prove it, and I know the courts will uphold that time stamp," Box explains. The company collected about $100,000 from customers to pay for damaged equipment in the first three months the new system was in place; previously, it would have had to pay the cost of repairing the equipment out of its own pocket.

"It's a very good example of how being a CFO and knowing the issues that are so common to the function spill over to the issues that affect IT," Box says.

80-hour work weeks?

That's not to suggest, however, that the joint CFO-CIO role doesn't pose some significant challenges.

Each of the positions on its own usually takes up more than 40 hours a week, so executives who hold dual jobs face some logistical pressure. Hopkins, for instance, estimates that he's putting in 80 to 100 hours a week at World Telecom. "The people who have both roles have to really have a lot of stamina. I had to do a lot of soul-searching to stick to it," he says, adding that it's easier to tough it out if you have an exit strategy in place.

And each job comes with its own set of specific responsibilities, skill requirements, idioms and tools, creating a tall order for anyone who aspires to a dual position.

Gartner analyst Barbara Gomolski says there aren't many professionals who are qualified -- or willing -- to take on such a challenge. "I don't think there are too many CFOs gunning for the CIO job," she says. "[Companies] would have a hard time finding a person that is so well-rounded that they could do it well."

Gomolski sees the CIO role combining more naturally with a COO or chief strategist role than with the CFO job -- partly because the regulatory and financial complexities that a CFO must handle are typically outside IT's purview.

I don't think there are too many CFOs gunning for the CIO job.

"With the CFO, there's regulation, cash flow management and risk management. Those are the things you want the CFO thinking about. Not, 'Do we go with Salesforce or Oracle?'" she says.

For all that, Gomolski says she has come across companies with dual-executive positions on a regular, if not frequent, basis. They tend to be small or midsize organizations. (For example, Joe Money Machinery has about 70 employees and World Telecom has about 25.) Gomolski says a combined position generally wouldn't be feasible at a larger company, simply because there would be too much work to be done in each job.

The person drives the position

Leaders of companies with a dual CIO-CFO say the decision to go with a combined post is driven not so much by organizational structure as it is by the talents of the specific individual being considered for the job.

Jack Wilhelm is senior vice president, CFO and CIO at Emerson Hospital in Concord, Mass. He added the CIO title just a year ago, following the previous CIO's departure.

At that point, executives -- Wilhelm among them -- saw a need for the hospital to focus more strongly on IT, which had been plagued with problems such as a 28-hour outage.

Wilhelm, who built his career in hospital finance departments, where he often had IT reporting to him, says that he believed taking on the CIO job would be the most efficient way to get IT on track.

Emerson Hospital President and CEO Christine Schuster says she and other executives knew that Wilhelm understood enough about IT -- and how to build a strong team -- to get the job done.

"We were in the middle of a lot of critical projects, and I felt like I really couldn't put those projects on hold, that we couldn't miss a beat," she says, adding that it typically takes months to find a new CIO and bring him on board. "In our case," she says, "I do think it was the right person, and the timing was perfect."

Doing double duty requires some adjustments -- both for Wilhelm, who oversees a 37-member IT department, and for those who report to him. Wilhelm says he doesn't have the time to attend as many conferences, webinars and other events as he'd like to in order to learn about new technologies. He relies on his staff and outside consultants to handle tasks requiring deep technology expertise as well as some financial duties. "It means the people underneath me really have to be able to run with the ball" -- more so than staffers in an IT shop with a dedicated CIO, he says.

Does Finance have the upper hand?

Those in joint positions acknowledge that the dual role can create some confusion in the executive ranks.

"The weakness is truly that the CFO part of the job overshadows the CIO part to a large degree," says Hopkins. The CFO role prevents the CIO from being overly biased toward IT -- which might not always be the best thing for IT, Hopkins says.

Once the CIO takes on financial responsibilities, he or she must embrace "turn the crank" operational responsibility, make decisions about capital expenditures, and remember that his job is to invest dollars throughout the organization, not just in IT. "It's difficult for me to champion dollars for IT infrastructure when as CFO I'm involved with the politics of dollars spent in marketing, advertising, operations and so on," says Hopkins.

For his part, Joe Money Machinery's Box acknowledges that having dual responsibilities means that he can be unavailable to IT staffers who want to discuss technology issues. And because he came up through Finance rather than IT, some IT employees don't see him as one of their own.

Box addresses those concerns by making sure staff members know that he's available and can be interrupted at any time to discuss critical issues. He also says that he makes "no pretense of being anything other than what I am." Since his IT role is primarily strategic, rather than being focused on day-to-day operations, he reasons that it's not a real liability that he hasn't spent years dealing with some of the operational issues his department faces.

"If the staff feels that they are appreciated -- and they certainly are -- then I believe most of the drawbacks perceived from a staff level can be managed."

Short-term stopgap

Given that the job descriptions of these dual positions are tied very specifically to the individuals filling them, it's not surprising that the companies don't see combined titles as permanent.

Executive summary

The dual CIO-CFO: Benefits and drawbacks in a nutshell

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