The boardroom is changing. As technology establishes itself as integral to business, it’s impacting the board’s structure and balance of power.
One of the most significant technology-driven impacts is the enablement of CFOs to hold an undeniably strategic role within the business. As technology continues to accelerate changes, CFOs and CIOs must work together to secure their organization’s future.
Aligning the CFO & CIO
With technology playing a larger role in creating a competitive advantage and driving company value, it is essential that CFOs collaborate closely and effectively with CIOs to build a strong finance department.
However, in a recent poll from Deloitte, fewer than one-third of respondents said the CFO and CIO at their company “share a strong partnership characterized by mutual understanding”. Deloitte’s poll also reveals that IT often makes up a significant portion of a CFO’s budget, and 22% of CIOs report to their CFOs, emphasizing the importance of getting this relationship right.
The problem is that technology and finance don’t always see eye to eye. IT typically advocates the new while finance generally prefers the tried and true. And while it’s clear that the CFO and CIO need to align, creating a strong, collaborative relationship has proven to be challenging ― but it doesn’t have to be.
The first step to building a successful partnership between the CFO and CIO is to create mutual understanding. Here are three steps to help you get started.
CFOs & CIOs: 3 Steps to Establish Mutual Understanding
Learn the lingo. Clear communication is a struggle that both the CFO and CIO face in their attempt to create a solid business relationship with one another. The language of technology is different from the language of business, and CIOs sometimes struggle to communicate in a business manner.
This can hinder the ability to align the priorities and ROI of IT projects with the CFO’s focus on both the top and bottom lines. Many CFOs also have an outdated understanding of IT.
As a result, CFOs need to update their basic knowledge of technology, and CIOs need to be able to communicate in business terms.
Set IT goals together. CIOs often find the expectations of CFOs to be unrealistic, stemming from a lack of awareness of the realities of managing and implementing technology at large organizations and a lack of understanding of the technology itself. Make sure to clarify what is hype and what is reality to establish reasonable expectations of technology and effectively align IT with business strategy and timelines.
According to a Deloitte CFO Signals survey, it’s important to have IT involved from the beginning of a project. Organizations that report a high level of satisfaction with IT generally have formal leadership discussions from the beginning around what is needed from technology to support the business strategy.
Collaborate regularly. Misunderstandings often occur because the CIO and CFO have very different backgrounds and they may not understand the challenges and complexities their counterpart faces. No one person or department can lead all the technological changes that are required to stay competitive in this data-driven age; there is going to be overlap in departments and responsibilities.
Collaboration among all C-level executives will likely become the norm. Consistently working together will help expose each side to the challenges the other faces and build stronger relationships.
As the impacts of Big Data, analytics, and other technological innovations continue to grow, CFOs and CIOs must overcome challenges to strengthen their partnership for the sake of their company. A united force will align IT investment with strategic growth plans and optimize business performance.
The future of the boardroom will see the setting of many goals and an increasing overlap of responsibilities. By following the three steps above, CFOs and CIOs can establish the mutual understanding needed to give each other necessary support and build an effective relationship.
Read S&P Dow Jones Indices’ CFO’s perspective on the changing role of the CFO and technology's impact on finance departments.