IT Focus Area: strategy
January 3, 2013
Effective CIO-CFO Collaboration: The Power of Two
Most chief financial officers (CFOs) and chief information officers (CIOs) know that they need each other to ensure company success.
CFOs know that information technology (IT) enhances processes and enables growth, while CIOs know they need finance’s buy-in to fund and implement IT.
Both roles are heavily involved in risk mitigation, security and compliance issues.
IT has always driven productivity gains, which CFOs love. CFOs and CIOs that work closely together are a powerful alliance—generating more value for the entire enterprise.
It would seem a natural pairing for a strategic partnership, right?
Too often, however, that is not the case.
According to a joint study by Gartner, Inc., a leading technology research firm, and Financial Executives Research Foundation (FERF), the research affiliate of Financial Executives International (FEI), the “CFO is becoming a top technology investment decision maker … with 44 percent of CFOs stating that their influence over IT investment has increased since 2010.” While CFOs understand that IT is a benefit to the organization, they still often view it as a cost center. This can create an underlying source of frustration between CIOs and CFOs.
Despite the differences between CIOs and CFOs, Michael Friedenberg, president and CEO of IDG Enterprise—a large media company that owns publications such as CFOworld, CIO, Computerworld, CSO, and Network World—says, “… the business-focused collaboration between the CIO, CFO and CEO has never been more important to the health of enterprises.”
While the business case for CIO-CFO collaboration makes perfect sense, the process of opening the doors for collaboration and strategic partnership is not always easy. As both C-suite positions continue to gain an overall enterprise perspective, there is still some room for growth when it comes to optimizing the value of IT services. If IT and finance come closer together on demonstrating the strategic value of IT, not just operationally, but in terms of how IT can help the business, the business can compete more effectively and have more competitive advantages, moving the organization to business and IT unification.
“… the business-focused collaboration between the CIO, CFO and CEO has never been more important to the health of enterprises.” — Michael Friedenberg, president and CEO of IDG Enterprise
CIO and CFO: Know Thyself and Thy Ally
Accomplishing these goals requires CFOs and CIOs to seek and gain a clearer and better understanding of each other’s business area. CIOs spend a great deal of their time and energy maintaining the current IT environment, performing vendor-mandated upgrades and managing a budget that demands doing more with less. The costs associated with these activities are sometimes hard to justify to the business. To maintain awareness of the strategic value of these IT costs, effective CIOs work hard at building more influence internally and improving relationships with CFOs—and other C-level business leaders.
Successful CIOs proactively understand their CFO’s view on technology and the CFO’s perspective of the business. They put technology requests in business terms, know how to calculate the business return on investment (ROI), can articulate the total cost per unit per IT service, and question every cost. (Read Building a Successful CIO-CFO Relationship: 7 Tips for CIOs.)
Likewise, successful CFOs talk strategy, not tactics, stay up to date on the latest technology trends, lead cross-functional initiatives, and often look to the CIO to solve financial problems. (Read The Value of the CFO-CIO Partnership: 4 Tips for CFOs.)
Individually, finance and IT make up two powerful business areas. Finance, under leadership from the CFO, helps the business reduce costs, increases efficiencies, and contributes to corporate analysis and business decision-making. IT, spearheaded by the CIO, helps the company understand and take advantage of technology trends such as mobility, big data, bring-your-own-device (BYOD) programs, transformational technologies (e.g., cloud computing and virtualization), and complex security challenges (e.g., advanced persistent threats).
With increased collaboration, these two teams can become a highly strategic business alliance.
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