The relationship between CIOs and CFOs is unique: the CFO is responsible for implementing the financial strategy, and the CIO is an essential enabler for translating that strategy into action. Digitization is the obvious link that brings the two functions together, and it’s about combining knowledge of technology and processes that will deliver innovation across the organization.
As the role of technology evolves and takes on ever-greater significance, the IT function is now much more of an innovation driver, enabling new business models and enhancing efficiency. Increasingly, CIOs need the collaboration with CFOs to manage areas such as cybersecurity, establish IT strategies and processes, transition to a digital IT function, and create an analytics-driven organization. In the context of driving business transformation, building a dynamic and mutually enhancing partnership between the CIO and the CFO is essential.
Getting through to each other
A recent EY report found that CFOs reported that their relationships with CIOs are hindered by their lack of understanding of IT issues, and their prevailing view of IT as a cost center rather than as an asset. While two-thirds of the CFOs surveyed said managing cybersecurity is a high or very high priority, nearly half (44%) noted that a lack of understanding of IT issues to appropriately invest in cybersecurity capabilities is one of the top obstacles to forging a closer working relationship with the CIO. On the other hand, the tendency for CIOs to discuss cybersecurity issues in technical jargon, rather than business language, can also block fast decision-making and action.
How can CIOs and CFOs better communicate with each other? To begin with, both parties need to recognize that they actually have a lot of common ground. Both want to improve efficiency, minimize downtime, gather data analytics to make better business decisions, and become more agile to meet the changing needs of the organization. Beyond that, CIOs and CFOs must align on institutional goals and want to reap the advantages of a sound technology infrastructure and the strategic use of data. The key to a strong partnership is mutual respect and an understanding that both parties want the same success for the institution but have different responsibilities in achieving their common goals.
Accountability and dynamism
As CFOs and CIOs work more closely together, an area of growth is undoubtedly the use of analytics and data management capabilities to drive financial and strategic decision-making. This mission-critical convergence of technology, investment strategy, and risk has elevated the CFO-CIO relationship to new levels of importance. Any disconnect between the CFO and CIO will have profound consequences for the organization and jeopardize advancement.
For the CFO-CIO partnership to thrive, there should be joint accountability for driving projects to the desired result. This is only possible when the finance function works shoulder-to-shoulder with the technology team. The teams should work together to develop a road map and recognize their joint accountability in meeting deadlines and milestones.
In terms of reporting, for instance, a strategy that would help IT and finance align would be to set up a model where the finance function understands and leverages the enterprise analytics team to meet their reporting requirements. In return, the IT function provides standardized steering metrics and defined reporting that is aligned across the whole company. For fraud protection, for example, IT can analyze suspicious patterns that can then be investigated and addressed immediately, leading from insights to action.
In learning to understand and speak each other’s language, and also commit to specific outcomes for the business, a strong CIO and CFO partnership will be able to drive both the speed and the cost of change for a better business and sustainable profits. The EY report suggests that the collaboration hinges on the following success factors:
- Drive innovation through new digital technologies.
- Shift the IT operating model emphasis from Capex to Opex.
- Manage the risk exposures of new digital IT.
- Work as peers regardless of reporting line.
- Build the tech-savvy finance function.
For more ways to increase your productivity, see Boosting Efficiency For CFOs And The Finance Function.