Partnering with IT

As Seen in CFO Studio Magazine Q2 2017 Issue

-By Michael Rist, Chief Financial Officer, VIP Petcare

ARE YOU ASKING YOUR CIO THE RIGHT QUESTIONS?

As the role of the CFO continues to evolve, finance executives must continually augment their knowledge of technology and how it impacts the continuing operation and strategic direction of the company. This starts with open and ongoing dialog. The CFO needs a good understanding of how the IT department is positioned in the context of the overall strategy of the company. Below are five key questions to ask your CIO regardless of industry or company size.

How is the IT strategy aligned with the corporate strategy?

Asking this question allows you to gauge where resources are being directed within IT and if they are yielding returns that exceed the hurdle rate. You need to make sure there is a viable business case for every material project in the IT portfolio that supports the corporate strategy. It’s important to note that not every project will translate into an easy-to-calculate ROI, and qualitative measures must therefore be in place to ensure that shareholder value is created.

What risks are you already planning for?

The answer should include testing, firewalls, critical system failure, anti-virus, spyware, anti-malware, etc. If you are holding credit card information, you must comply with the Payment Card Industry Data Security Standard (PCI DSS) and keep that compliance up-to-date every day. Not doing so may expose you to hefty fines and the risk of losing the authorization to process payment card transactions. The goal here is not to eliminate or minimize risk but to manage the risk exposure to ensure the right level of risk, in order to effectively pursue the strategic goals of the company.

What scares you? (If he says nothing, that’s a problem!)

There are numerous things every CIO should be scared of, from zero-day vulnerability to social engineering or phishing, which has become more and more sophisticated over the last couple of years. Key here is that the CIO makes you aware of these without all the technical details.

What is the security around our data and systems?

Not all data is equally sensitive. A plan must ensure that the most critical data is safeguarded. This plan should be a collaboration between IT and the rest of senior management.

What is our response plan for an incident?

Not every organization has one of these, and that’s OK, provided there is a clear plan of crisis response. Some organizations have generalized response plans for crises of varying types (critical system failure, natural disaster, power outages, weather, strike, etc.) with cyber incidents just another form of occurrence to be managed under such a plan. Senior management should run a process review on an annual basis.

Being a technology-savvy CFO doesn’t mean simply having the latest and greatest technology or knowing the latest cyber fad. It means being able to advance your organization’s growth or improve its competitive position by asking questions that identify key constraints holding back the organization from pursuing its goals.

A Strong Story

As Seen in CFO Studio Magazine Q2 2017 Issue

-By Jerome D. Kern, Vice President & CFO, Flexi-Van Leasing, Inc.

WHEN HANDLING INVESTOR RELATIONS, INFORMATION, NOT NUMBERS, IS IMPORTANT

You’ve just sat down in the big chair. You’re a new CFO. Congratulations! If you grew up on the accounting side of the house, investor relations may be new to you. Here’s what to keep in mind about this significant, new responsibility.

Investor relations is how a company communicates and interacts with external parties to ensure that your company’s financial story is being told accurately. While it may be a department reporting directly to the CFO, it may also be part of a corporate communications department. In either case, however, the CFO plays arguably the most crucial role for the company’s investor relations effort.

While investor relations is obviously important for public companies, it can be equally important for private companies, as even private companies may have to deal with equity owners and debt or credit analysts. Ensuring that external analysts have an up-to-date and solid understanding of the company allows the market system to work.

Timely and Fair

Remember that your goal in investor relations is not to prop up the stock price of your company. You’re not a salesperson. Don’t measure success in investor relations by stock price. Your goal is to ensure that information about the company — positive or negative — gets to outside parties when it is needed and in an appropriate way. Timely communications that follow the rules (the SEC’s Regulation FD, for example) are crucial to controlling news about your organization.

How do you get information to outside parties effectively? Press releases, earnings calls, presentations at conferences, and one-on-one analyst meetings are your main tools. What you’ll likely find is that there is a somewhat limited set of analysts that cover your industry or company size, allowing you to identify them and build a rapport. Remember, when developing these relationships, the kindergarten rule of “honesty is the best policy” holds true even here. You can be expected to present the company in a good light, but you must also present the company in a fair light. Don’t hide negatives, but be sure to present them in the right context. You wouldn’t be the CFO of a company you didn’t believe in, so make sure the people you’re talking to know the reasons your company will prosper — even in bad times.

When you’re talking to outside parties, the main rule of communication is: Know your audience. Different people will be focused on different things. An equity analyst or a portfolio manager may be looking for a growth story. That will get them the capital appreciation they crave. A fixed-income analyst will be looking for cash flow, either through dividends or debt coupon payments. A credit analyst wants to make sure you can repay your obligations. Tailor your comments to the person to whom you’re talking.

Overall, you should take on the persona of a professor. Teach people about your company. Be sure to not just be a numbers guy, though. Relate the numbers to nonfinancial metrics and build a story line. Stories are remembered. Numbers are forgotten.

A Career CFO

As Seen in CFO Studio Magazine Q2 2017 Issue

 

CHANGING INDUSTRIES CAN GIVE A CFO NEW PERSPECTIVE AND PROFESSIONAL GROWTH, SAYS ALISON CORNELL

The accepted wisdom is that CFOs tend to stay in one industry and build their success within that industry’s bounds, but Alison Cornell, who has navigated a career through telecom, health care, and specialty chemicals/consumer products, believes that “there is value created by moving between industries, not only for the CFO role that we perform, but also in developing a broad-based perspective that will be valuable in future Board of Directors participation.”

Ms. Cornell was the guest of honor at a recent CFO Studio Reception at the Governor Morris Hotel in Morristown, NJ. Andrew Zezas, publisher of CFO Studio magazine, introduced her to the assembled CFOs, noting that Cornell has shaped a nearly 30-year career in key global leadership roles in three different industries. She was profiled in the Q1 2017 cover story.

“We each set our own path,” Ms. Cornell began. “Some see limitless possibilities, others see limited possibilities… I’m in the limitless possibilities camp, believing that our financial skill set is fungible.” And so, she described five ingredients of a “winning formula” for a career path through successive industries, creating “a track record of consistently growing businesses, achieving sustainable results, attracting and developing talent, and taking businesses to new heights.”

The ingredients are: Be open to change; learn the business soup to nuts; make a difference while you’re there; be a positive and motivating force; and have the best team on the field. With regard to that last point, she said that when she arrived at Covance, a drug-development services organization where she worked from 2004–2015, she “changed about 75 percent of my direct- report team and built an awesome team that helped drive the business turnaround, sustainable growth, and the returns that we achieved.”

“Don’t pigeonhole yourself,” she said. “Don’t be afraid to fail.” (She’s not.) “Know what you’re passionate about.” (She does.) “And go there.” (She will.)

Copyright 2017