Earl Fry thinks of himself as the next generation of financial executive. As CFO for data integration software and services firm Informatica, NASDAQ traded as INFA, he not only oversees IT, but is compelled to be an active participant in the organization’s technology decisions.
Fry, based in Redwood City, Calif., tells CFOworld’s Sandra Gittlen that all finance officers should take an interest in IT, even if it’s not under their direct purview, and to do otherwise would be a critical mistake.
In addition to IT, what areas of the company do you lead?
I like to joke that I do everything nobody else wants to do. That includes finance, accounting, HR, facilities, legal, and investor relations. Of the more than 2,100 employees we have in about 18 countries, I have 420 reporting to me.
Has IT always fallen under the CFO title at Informatica?
From the day I started, 11 years ago, I’ve had responsibility for IT. In the past, IT was seen as a backward-looking necessary cost to keep systems running and there was not a lot of forethought in terms of strategically looking at systems, managing data, scaling infrastructure — it was severely underinvested in and struggling to keep up with growth.
We’ve made sure to put the right people in place and that we make strategic investments where we think we can get good returns. We’re not just playing catch up. The CFO can’t be solely focused on finance — there has to be a balanced perspective.
Is there a defining moment that you believe has forced finance teams to partner with IT?
Yes, and it’s not the obvious one of Sarbanes-Oxley, although that is important to ensure that we have systems to capture, trap and provide lineage for data. Instead, I’d say this current shift to cloud computing where data is being moved outside of the organization’s firewalls is a much bigger issue with much more long-term and profound implications for finance and IT.
From a business perspective, in many cases targeted, on-demand services are more cost-effective and provide more responsiveness to users. However, they pose problems for IT in trying to marry existing in-house infrastructure and the data within it to what’s sitting in the cloud. IT may not care at first if a department signs up with a SaaS, but they will if that application becomes meaningful enough to the organization. Finance will also care because they need to ensure the security of the data and that there is a single version of the truth. You can’t just say I’ll rely on what’s sitting on my in-house general ledger when everyone else is making decisions off a SaaS.
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There’s also the consideration that when my senior vice president of finance pulls together his reports for the SEC, he’s not just pulling numbers from the general ledger. Instead, he needs information that comes out of other databases [that could be in the cloud] such as a breakdown of revenue, orders by products, and sales to OEMs vs. end users.
How did you address this internally? Some companies either turn a blind eye to departments and users subscribing to cloud-based services or they ban them outright.
We took a different approach. Instead of being a roadblock, we decided to embrace every single business user’s request for SaaS. This enabled us to shadow the implementation from the start and figure out where, if any, we’d need to have integration points immediately or down the road. Today, we have almost 20 on-demand applications, including a sales force database, HR programs, expense reporting, compensation management, time management and IT tools. This aggressive stance has helped IT get ahead of the on-demand services curve. Had they not, and users wanted dashboards or data integration, the vendors wouldn’t have been able to help them and they would have had to come to IT anyway. This makes for a much better relationship between IT and business users.
What do you think is the most important part of the finance and IT relationship?
Communication. Our vice president of finance and CIO regularly have lunch together. They understand that each has to make trade-offs for the good of the business. We also have a quarterly governance process where all executives and key business stakeholders debate potential projects and do a post-mortem on recently completed projects. We look at how we all performed in terms of cost, timing, functionality and other criteria.
Have you ever overruled IT on a technology decision?
There was one time. Because there was no integration between our internal spreadsheet and forecasting systems where we try to project commissions, variable costs and payments, and other data, we came scarily close to missing a forecast. I told IT and my own finance team that we couldn’t take that kind of risk and we needed an on-demand service that would handle this task. They argued it wasn’t cost-justified. I called it “risk mitigation.”