Chris Pope, VP of Innovation at ServiceNow, discusses the importance of building and maintaining strong CIO-CFO relationships. He tells us how the strength of the relationship can determine the success of a business and its Digital Transformation journey.
When it comes to maximising the business benefits of IT, the most successful projects always share key attributes such as careful planning against clear objectives and an appreciation for the importance of people and process, not just technology.
However, before this can happen, the CIO needs to overcome the keen eye of the CFO. The relationship between the two needs to be closely aligned and this means going beyond just agreeing on budgets. They have to work together to ensure the organisation meets the needs of all parties involved – shareholders, partners, employees and customers alike. While it’s understandable for there to be tension between the CIO and CFO, pulling the rope in opposite directions accomplishes very little.
According to a report from Financial Times Focus, the CIO is considered the C-suite leader most able to drive change — but, to do so, they must be able to communicate with the rest of the business and stakeholders effectively, including the CFO.
So, here are some tips for CIOs on how to communicate better and form efficient relationships with their CFOs:
Ensure you’re speaking the same language
While CIOs are most often the ones found leading Digital Transformation projects, it’s still a vast process made from many moving parts and requires input from leaders across the company. The CFO’s main contribution to IT is still enforcing cost discipline as opposed to more strategic activities, according to 35% of CFOs in a recent report from EY.
For both CIOs and CFOs, it can be a struggle to have clear communication, which can get in the way of forming a solid business relationship with one another. The language of technology is different from the language of business, and the financial dialect varies somewhat too.
As such, greater collaboration will benefit both parties as well as the wider business. CIOs can benefit from a closer working relationship as the CFO is in a strong position when it comes to helping prepare for major IT investments. Additionally, support from the CFO is a powerful voice and can lend a hand when it comes to vouching for IT project investments.
Build processes to support and push for influence
The Financial Times report also revealed that over two thirds (71%) of CFOs feel CIOs are lacking in influencing skills and that these need greater development to deliver the change their business seeks. CIOs also need to develop those same communication skills within their teams, to ensure the right people are equipped with the right mixture of technical, business and influencing abilities.
This will enable the CIO to show confidence in the decisions the team is making, which is much needed to show how important technological decisions are being made and evaluated. For example, cloud migration processes are of course crucial to meeting key Digital Transformation objectives, but concerns over aspects like governance in adoption pose challenges. 70% of leaders including CFOs don’t have confidence in the IT function’s ability to manage cloud across the business, so greater clarity is needed on tracking performance through a strong network of communication.
Communicate each other’s areas of expertise
Whether the role is either financial or technological, there’s one key dependence that both parties share; the responsibility for risk and compliance in the organisation. It’s that shared responsibility which extends to the need for a complete understanding of each other’s roles and the challenges they face. CIOs should be familiar and aware of the financial demands and processes, and CFOs need to be well briefed on the plans for technological development with a high-level overview of what to expect.
The fluid and fast-moving nature of the cloud adds further complexity to the CIO-CFO relationship, and as organisations transition to the cloud, new and rapid shifts in IT spending and budgeting processes are more frequent than before — the IT and finance teams have to learn how to speak each other’s language. Research from Forbes shows that just under a third of CIOs found the CFO’s lack of expertise in the other’s field the biggest barrier keeping them working closer together, and vice versa, emphasising the gaps in knowledge are indeed present, and how both sides would benefit from learning about one another’s roles and activities.
Have robust roll-out plans
A primary strain on the CIO-CFO relationship revolves around budgeting and how costs are controlled. Historically, these functional roles speak a different language. The CIO’s pet projects are often expensive and take years to complete but that’s not much help to CFOs dealing with quarterly pressures. CIOs can sometimes struggle when communicating the true ROI of IT projects, as well as their impacts, activity priorities and key financial details. All of which are essential pieces of information on the financial side, and with CFOs’ sights set on ensuring and maintaining the financial health of the organisation, they expect CIOs to present a clear and detailed business case for IT investments.
Lead with data
Though the two leaders do have their differences in priorities and communications, there’s one aspect both parties largely depend on: data. Access to real-time data gives CIOs the ability to assess their investments in new technologies to help make better business decisions and should use this to their advantage.
The relationship between the CIO and CFO can make or break an organisation’s ability to grow, so it’s imperative that CFOs understand and value the potential the CIO and their IT team brings to the table — be it access to vast datasets, benefits from powerful analytical methods or the adoption of new and applicable technologies. Using these, the CIO and CFO can work together to identify and track key KPIs, an entity they can both understand and hone in on.
Achieving business success
As organisations continue on their Digital Transformation journeys, CIOs and CFOs are going to have to be on the same page sooner rather than later, so CIOs should aim to work in tandem with the organisation’s financial leader. Instead of leading with the plans they have and the required investment, information officers would see more success by speaking the CFO’s language, putting the case forward to them. What’s important is listening to one another and putting each own’s side forward in a matter that’s meaningful.
The CIO should aim to build their case as a response to the needs of the business as a whole. By appealing to the CFO’s near-certain desire to ensure the spending supports the strategy, the CIO can build stronger and more valuable relationships with the financial officer, while having a positive impact on the wider business.
Bridging the gap in the relationship between the two may require some extra time and hard work, but the whole organisation will benefit in the end – it’s trust, positive influence and a shared understanding that contributes to an effective relationship.Click below to share this article