A company’s management strives for synergistic value creation yet, working together doesn’t come easy: it requires constant effort and mutual understanding.
When considering a Chief Information Officer (CIO) and a Chief Finance Officer (CFO), the former is known to look at an innovative outlook and the latter is expected to look at a realistic one.
Imagine this: A CIO comes up with an innovative digital solution to address company’s problems. It’s seamless in integration, superior in quality, faultless in performance, rich in detail and simply, perfect. Still, when the financial approval is sought, the CFO may reject it because it’s too costly, too over-the-top and seems to be a mountain of a solution when the requirement is a molehill. Sounds familiar?
CIOs sometimes struggle to communicate the ROI of IT projects, as well as priorities, costs, commitments, and cash flows. Still, their knowledge and experience of technological solutions and their network of technology partners are priceless. CFOs often consider IT as an expensive budget item and therefore look to cut any cost they deem unnecessary.
Most CIOs are aspirational in their thinking; they seek the perfect solution and look at the future. CFOs, on the other hand, stand by the principle of “earn the right to spend” and place priority on ROI which can often be overlooked or oversimplified by CIOs.
This clash in philosophy often results in grudges, preconceived biases and ultimately, blocking the pathways for the company’s progress in the digital world.
There are several strategies to weave a mutually beneficial CFO-CIO relationship into the fabric of organizational success.
1. Communicate effectively
Communications don’t just mean exchanging words but also understanding personalities, respecting perceptions and accepting attitudes.
2. Mutually sharing organizational objectives and strategies
CFOs have good visibility into their organization’s objectives and key metrics, which could be shared with CIOs to develop technological contributions in achieving them since they have a good understanding of the organization’s IT potential.
Similarly, CIOs have a good vision of the technological landscape of the industry, which could be shared with CFOs to understand the true potential of the organization and show the pathway of achieving the objectives. This level of mutual sharing will help inculcate finance and technology into business solutions from the initial stages, resulting in more strategic solutions over tactical fixes.
3. Create efficient and automated processes
In many organizations, finance teams are still overwhelmed with manual tasks. Legacy systems – or simply MS Excel worksheets – are still favored over ERP systems and other advanced processes.
This traditional mindset has normalized slow speeds in organizational accounting, which sometimes justify why many companies release last month’s results in the middle of the following month!
The criticality of data-based solutions is still a novelty in many companies, hindering progress and resulting in slower and thereby less effective decision-making.
A good relationship between CFO and CIO will help instill better and more efficient processes while managing and overcoming resistance to change. With two teams working in tandem towards the unified objective of efficiency, legacy systems and manual workloads can be replaced by digitally advanced solutions that create a competitive edge. More importantly, when Finance and IT work together with mutual trust and confidence in each other, process automation can be achieved seamlessly and at a fraction of the time it will otherwise take.
4. Use of technology to enable insights
Data is the currency of success.
Both CFOs and CIOs carry a gamut of data that can be used in analytics and insight generation to drive business performance. When shared, these sets of data become a treasure trove of information.
Having the right data at the right time is crucial for business success. So, nurturing a good relationship with a team that has the data you need is a simple formula for success.
CIOs and CFOs working together to orchestrate data across the organization generates critical business insights that drive strategic responses.
5. Technology that brings strong ROI
CFOs always want to see higher ROI from IT investments while CIOs might struggle to prioritize projects that bring tangible business outcomes and higher ROI. Therefore, collaboration is essential whenever an investment decision is required.
When seeking approval for an investment, many IT teams find it challenging to talk to finance teams since they focus on qualitative factors while the other seeks quantitative angles. This results in a clash and subsequent rejection. Yet if both teams can compile a joint business proposal, getting Board approval becomes easy and mutual.
While there are many industry-specific use cases, the following are some generic data analytics use cases that affect revenue and cost, directly or indirectly.
For too long, we’ve seen companies having divided fronts in terms of its IT and finance functions. However, with organizations increasingly focusing on holistic business operations and unified direction, moving away from siloed and functional mindsets is crucial.
Collaboration, coordination and communication with mutual respect and trust – that’s the formula CIOs and CFOs must brew to create the perfect fit, with common objectives, to make the organization ready for next digital transformation.