Why CIOs and CFOs Need to Partner for Success

The CIO and the CFO are often at loggerheads in the traditional enterprise setting. The CIO keeps on demanding resources to upgrade the tech infrastructure. The CFO, with an eye on profitability and shareholder returns, counter such moves.

Success in today’s digital-first economy requires CIOs and CFOs to work together. Businesses cannot avoid digital transformation in the post-COVID digital-first world. They need to upgrade their systems to enable remote work, sell through digital channels, and deliver efficiencies. Also, the world has become fast-paced, and businesses need instant decisions. The old-world way of the CIO making requests and the CFO taking his own sweet time to think about it no longer works. Success depends on the CFO and the CIO collaborating in real-time and taking instant decisions to seize opportunities.

1. CIOs have to be more proactive

Technology-related investments have company-wide implications. Most CFOs help their CIOs fund new transformation projects if the initiatives promise strong returns. To secure CFO support, CIOs need to:

Articulate the business value and ROI of the new investments in clear-cut, quantitative terms. CIOs need the CFO’s help to apply sophisticated financial analysis. In a competitive market, the ROI and financial implications of each proposal become critical. Many CIOs put together best-of-breed systems to get better value. But in doing so, they miscalculate the costs of making all such systems work together.
Be transparent with the IT budget. Many CFOs now extend product-based funding rather than project-based funding. Product-based funding forces project managers to manage expenses and focus on the value. When funding is for the product or the outcome, product owners focus on the most valuable products that deliver the best value.
Build trust by delivering projects on time and within budget. One way is to opt for iterative development that reduces costs and produces quick wins.

2. Develop consensus on innovation

Often the disagreements between the CFO and CIO are over areas of IT spending. Innovations are a flash point, where expenses often exceed the budget, with nothing tangible to show.

Innovation is a costly exercise with no guarantee of success. CIOs driving innovation need to:

Secure commitment from the C-suite on the budget and acceptable levels of risk. The C-suite approval reduces friction and aligns the CFO with the innovation strategy.
Prioritise technology that delivers commercial value. For instance, an integrated field management suite that streamlines field agent scheduling and co-opts invoicing gets more support than a standalone tool.
Establish a strong day-to-day collaboration channel between the innovation team and the CFO and CIOs. Keep CFOs in the innovation loop, even at the ideation stage.
Solve budget issues through constructive discussions and consensus. The issue continuing at a loggerhead is a lose-lose situation. The project ending in a stalemate leads to the entire investment frittering away.

3. Adopt new ways of work

Effective collaboration between the CIO and CFO ensures optimal utilisation of the IT budget. The onus is on CIOs to adopt new ways of work. Successful CIOs,

Understand the company’s products and processes in-depth. They forge productive partnerships with other executives to align technology investments with business.
Find out the big picture of their technology investments. Technology has become all-pervasive in the post-pandemic world. CIOs now have a broader responsibility to manage costs. They have to consider the business outcome of tech spending. The old way of focusing only on the efficiency of whatever they spend no longer suffices.
Keep the customer in mind when deciding. The best digital transformation initiatives add value to the customer. For instance, the changes make it easy to access information, complete the purchase, contact support, or anything else.
Be resilient to change as the business situation unfolds. A primary reason for CFO being at loggerheads with the CIOs is the latter’s inflexibility. The CIO may have invested considerable time and energy in a product or process. But this may have become redundant overnight as customer preferences change. Consider a fast-food chain that focuses on improving the in-store customer experience. When the pandemic hit, the business model collapsed. The company closed many outlets and opened several small-format exclusive takeaway outlets instead. By being resilient, the company could meet changing customer needs and provide a better customer experience.

4. Leverage data and develop metrics

Developing quantitative standards and measurements clarifies expectations and improves collaboration. Good, workable metrics bring CIOs and CFOs on the same page. Having data-driven insights in place offers a common ground for CIO and CFO to align their work.

IT needs new metrics to transfer the effectiveness of digital transformation. Measuring IT’s value using conventional technology metrics is passé. Business impact metrics, such as cost, revenue, productivity, resiliency and efficiency, matter now. For instance, simple cost-cutting exercises may no longer be enough. What matters in most cases is long-term resiliency.

Create new metrics that connect with enterprise objectives rather than simply track activity. Examples include customer satisfaction and speed-to-market.
Cascade down the metrics used to measure senior enterprise executives. For example, consider the C-suite setting a target of customer satisfaction scores above a percentage. The CIO objectives should reflect those standards.
Leverage data to make cost-cutting and savings decisions. For instance, check usage patterns to rationalise licences and servers.
Using data to challenge assumptions allows for valid criticisms. Doing so makes the challenge powerful and does not sour interpersonal relationships.

5. Promote a learning organisation

Enterprise success in today’s knowledge economy depends on promoting a learning organisation. Both CIOs and CFOs need an open approach to learning about each other’s roles and responsibilities. Tech-savvy CFOs and finance-driven CIOs improve the enterprise’s decision-making capabilities.

Both CFOs and CIOs should answer questions such as:

Are the tech purchases delivered the expected ROI?
Are the purchases fulfilling the desired needs?
Are new products put to the best use?

Enterprise success comes when both CFOs and CIOs arrive at the same answers or strive for a consensus on these aspects.

Successful CIO-CFO collaboration depends on both executives having a strong understanding of the business and unwavering commitment to the customer. CIOs have to filter their initiatives by considering how they would benefit the company and delight the customer. CFOs should do likewise when deciding to approve or deny finances. Such value alignment enables the enterprise to move fast and seize competitive advantage.

Christopher Khor

Christopher provides technology insight as well as advising & coaching services to IT Professionals. He is also an Adjunct Teaching Mentor with SMU Business School. He graduated with an MBA as well as MSc(Computer Science) and has over 30 years of working experience, serving in critical roles such as IT Director and CIO positions. He believes in the power of relationship building and people development through mentoring and coaching organizational success.