What's your IT score?

• Author: Grand, Gordon, III
• Position: Chief financial officers and information technology

It isn't uncommon for CFOs to spend as much as a quarter of their time on information technology-related tasks. But that brings up an important question: Just how extensively involved should the CFO be in information systems? How much do you need to know about technology to be an effective financial executive?

As an executive recruiting firm, we hear this question both from firms looking to fill CFO positions and from executives seeking to fill them. The issue is complicated by several factors: the traditional link between the CFO and corporate information processing, the growth of information as a significant budget item, the evolving role of information in decision-making and the CFO's expanding job description.

In the past, the gulf between the large numbers of people who wanted to use the technology and the relatively small number who understood it reinforced the notion of information technology as a distinct field of expertise. At the same time, more and more enterprises found information technology taking a central role in improving business operations, even creating competitive advantage. That's how the chief information officer won his own place at the senior management table. Today, roughly 40 percent of the CIOs of major firms now report to either the chief executive or the chief operating officer.

STRIKING A BALANCE

So it's not surprising that the CFO/CIO relationship is in flux: As the CFO emerges as the point person in the strategic marshaling of the firm's resources, it's natural for him or her to also have some oversight on what information is gathered, what it costs and to what use it's put. At the same time, however, it's clearly not the best use of executive skills for the CFO to take on the CIO's job. The challenge, then, is to strike a balance. Here's where we think the boundaries should be drawn:

* The CFO first needs to understand the role that information plays in the company's strategic decision-making, and to be able to evaluate the suitability of that information. Does the company have the information it needs to grow market share, minimize inventory costs and develop winning new products? In short, how can investment in the right technology improve the bottom line?

* The CFO should then be able to measure those information needs against the technical tools available. As with other capital expenditure decisions, he or she should know enough to judge the likely return on investment - not only in the present, but in...