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Increasingly, CIOs come from a non-technology background. Here’s how one drew on his finance experience to help transform a traditional IT department.
By Ron Ranallo, Chief Financial Officer, Velocity
Today, I’m Chief Financial Officer of Velocity, a managed technology services company. Six months ago, I was the CIO-equivalent at Cooper Tire & Rubber. A somewhat unusual career progression, you might say – but it wasn’t my first such move.
Useful Lessons from Finance
I actually joined Cooper Tire in 2008 to head up its internal audit function, after 25 years in various controller, audit, and treasury roles at Owens Corning, Eaton Corporation, and Marathon Oil. Two years after joining, however, I became Vice President for ERP Integration, responsible for the implementation of Cooper Tire’s SAP enterprise software system.
I often joke that I missed a meeting and someone volunteered me for the daunting task of ERP installation. In fact, I think the leadership was looking for a business person with a financial bent to help replace our lengthy list of legacy systems with a global ERP solution to foster our growth as a global organization. As a former business user and financial controller, I was in a position and had the perspective to try and ensure the system worked well from the internal customer’s point of view.
Then, when I moved up to head Cooper Tire’s IT function, my financial background proved useful in helping IT start the transition from traditional on-premises hardware purchases to an IT-as-a-Service environment. This shift changed the accounting treatment of IT in a significant way, because IT purchases now often went directly to the operating budget as an expense rather than a capital expenditure that the company could amortize and depreciate.
This might seem trivial, but it is a significant change in the way budgets are constructed and IT costs are allocated to process areas and business units. If the IT operating budget is going up because the cost of X-as-a-service is greater in a given year than depreciation might have been, the business’s allocation to the IT department will also go up.
Regardless of the allocation process, CIOs need to be effective at developing and communicating this shift in approach. They need to understand the accounting and budget ramifications, and the ROI associated with that service acquisition.
So, while Finance and IT can seem like very different domains, the modern IT function can gain value from finance expertise and perspective. Conversely, the finance function can benefit from familiarity with technology opportunities to improve financial processes. That certainly has been my experience as I have moved between the two fields.
Managing the Long-Distance Relationship
The shift to service-centered IT has affected Cooper Tire in other ways besides the change in accounting and budget treatment. Until we deployed our ERP solution in 2013, we did not use offshore support; by the time I left, the primary way for handling that space was through offshore partnerships. We also began using offshore support for our infrastructure and many of our apps, as well.
This was a difficult cultural change for my department, as it is for many companies. People were naturally (and often justifiably) worried about their jobs, and about a change in the culture as the IT organization became more offshore and outsourcing-focused. My view was that this shift allowed us to leverage the core competencies of the respective partners and free up Cooper resources to focus on initiatives linked to growing and transforming the company.
This shift in approach also forced IT leadership to acquire and exercise new skills. If you don’t work with your staff face-to-face, you have to learn how to manage your partner remotely – on the phone, on WebEx, on conference calls – and that in itself is a learned skill. It may sound matter-of-fact-ish and natural, but I don’t think it is. When you can’t do it in person, it changes the dynamic.
However, face time is still the best. Two of my managers once returned from a trip to Chennai and Noida in India said, “You know, we could have done those meetings by phone and probably got most of what we needed to get accomplished. But doing it in person and developing personal relationships has longer-lasting positive ramifications.”
I think in some ways the experience of working with offshore partners unified my department, not because it became a “we vs. them” environment, but because Cooper’s IT staff realized that the only way they were going to be effective and get things done was by blending the teams together and working as full partners.
What I preached from Day One was that we just couldn’t talk in we/they terms. Whether the team members were in Ohio or in India, it had to be “us.” Our users weren’t going to care whether it was me or ABC or XYZ company on the phone or in a chat; they were going to care that they had the right experience and the right environment and the right support and the right response time. Still, although we evolved away from the we/they phenomenon, it would still creep in from time to time – something I found to be unhealthy and unhelpful.
Supporting the Customer
At the same time that we were learning to work closely with our offshore partners, we began working more closely with our internal clients. To help establish strong relationships with our business customers, we dedicated relationship managers who concentrated on supporting particular process areas, such as order-to-cash, procure-to-pay, or the operations group. These relationship managers worked with their business partners on ideation, project development, project planning, and project delivery.
This shift in focus implies what I see as the biggest challenge most IT organizations will continue to face over the next five years: finding the right balance between running your IT environment and transforming it. That means investing in and maintaining an environment that is safe, current, and supported, while simultaneously making the strategic investments needed to grow and transform the organization.
In my current CFO role at Velocity, I no longer deal with some of the issues – such as the use of offshore partners – that preoccupied me as CIO at Cooper Tire. Still, my IT experience gives me a unique perspective on that big IT challenge of finding the right balance of investment between running IT and transforming it.
Although different realms, Finance and IT can benefit from understanding each other’s perspective.
Buying services rather than investing in hardware makes business units more focused on their IT costs, which makes the CIO’s job more challenging.
External partnerships can only work if both parties are treated as equal partners. Talk of “us” versus “them” undermines this.