What should a CFO know about dispersed computing?

• Author: Reddutt, Kay Lewis
• Position: Chief financial officer - Dispersed computing in information systems management

What should a CFO know about dispersed computing? Information systems have become a competitive resource in many organizations. Now, financial executives responsible for IS have to worry about how to provide effective systems to their many and varied clients within the organization. Is dispersed computing the answer? As CFO of a medium-sized commercial bank, Steve Dell has the information system (IS) function reporting to him. As he went through his mail one Monday morning, he found an astounding memo from Lew Dollar, the vice president in charge of the cash management function. It went like this: Dear Steve: As you are aware, my function is coming under increasing pressure from our competitors, who are promising far higher returns on their customers' accounts than I can and who are providing customers with online access to their accounts on an as-needed basis. In this division, we have lost three of our largest accounts in the last six weeks; the clients point to our poor cash management capability as one of their chief reasons for switching.

You have had about a dozen people in your IS group working on our new cash management system for more than a year. My people have devoted a great deal of time to specifying our requirements for a competitive system and have been charged back more than $1 million on this project to date. Vic Clarke, our account manager from IS, told me last week that the project could be completed in "about a year," but this is the third time that the target completion date has been revised. I have no confidence that it will not be changed several more times before we have a functioning system. Given the competitive pressure I am experiencing, if I do not have some new capabilities in the cash management area within the next six months, we risk losing significant share in this important market. Bottom line, I will not be able to meet my business plan contribution to the bank's profit margins.

Therefore, I am initiating action to examine cash management software from outside suppliers, possibly as a stopgap measure.

At present, your people's careers do not depend on my business success. If we had IS people reporting directly to me as an integral part of my staff, I believe they could find ways of getting better systems faster. Therefore, I am requesting that you transfer your 12 IS people, plus a manager, to my organization, reporting to me, effective 30 days from this date. I will provide access to whatever technology and space they might need. Permanent assignment of IS people into my area will greatly expedite systems development since these staff members will develop an excellent understanding of my side of the business by being a part of it.

Steve, I am hoping we can arrive at an amicable agreement on this and that I will have your full support. In any event, I am prepared to carry it to whatever levels necessary to get the resources to regain our competitive position. In essence, Lew wants to control his IS future in order to control his own bottom line. He can't wait the usual three to five years for his new system; he may not be in the cash management business by then. He is betting that if the IS people report to him, they will identify with his success and do a more...