(Guest blogger Matthew Schwenderman is a principal with Deloitte Consulting LLP, a Workday Services Partner, and leads the Performance Management Technology practice.)
As technology transforms existing business models and gives rise to new ones, the relationship between the CFO and CIO is becoming increasingly symbiotic.
CFOs rely on CIOs to oversee critical IT investments required to fuel growth and generate data-driven business performance insights. Likewise, CIOs collaborate regularly with CFOs on business strategy, cybersecurity, and innovation. In some instances companies have set up the reporting structure to have these two roles more aligned, with roughly 22 percent of CIOs reporting directly to CFOs, according to Deloitte’s “2015 Global CIO Survey”.
Technology spend is often a significant expense, but if invested in the right areas can be considered a revenue driver as well. In a recent Deloitte “CFO Signals” survey, CFOs cited efforts to improve strategies for managing IT, and for providing better data and insights, among their top agenda items for 2016.
Yet despite the many successes that can be attributed to CFO-CIO teamwork, there is still room for improvement in the way these two roles collaborate. As cited in a recent “CFO Insights” article, an informal poll was taken during a Deloitte webcast, and less than one-third of respondents said the CIO and CFO at their companies share a strong partnership characterized by a mutual understanding of their respective roles.
CFOs can help CIOs articulate how IT impacts specific, key business processes.
Given the importance of aligning IT investment with strategic growth plans, CFOs and CIOs can lay the foundation for successful collaboration by taking the following steps.
Get to Know Your Colleague
Make a concerted effort to understand the other’s “business personality” and communication patterns, as well his or her priorities, responsibilities, and goals. It can be enormously helpful in fostering collaboration. When you have a good grasp of the other executive’s perspective and what’s important, it becomes much easier to explore your shared focus areas, and to better understand areas where your priorities may diverge.
Focus On Value Creation
Some CIOs have garnered an unfortunate reputation for favoring “shiny” technologies over those that actually meet specific business needs and drive real value. At the same time, certain CFOs can be described as having a “if it ain’t broke don’t fix it” approach to technology systems. To make every IT investment dollar count, CFOs and CIOs should consider working together to develop investment strategies that support balanced drivers of shareholder value: Revenue growth, operating margin, asset efficiency, and the market’s expectations about performance. Methodically viewing potential IT investments this way can help CFOs and CIOs streamline the technology vetting process and identify both the strengths and weaknesses of potential investments.
CIOs can help CFOs understand how accuracy or consistency of data might be improved with technology.
Along these same lines, CFOs can help CIOs articulate how IT impacts specific, key business processes. When discussing the sales process, for example, CFOs could help evangelize how an investment in IT will improve the quality and timeliness of the sales data available to drive better business decisions. Or, CIOs can lend their expertise in situations such as compliance processes, helping CFOs understand how accuracy or consistency of data might be improved with technology.
Find a Common Language
Finally, partnerships often work best when all parties follow a common set of processes and guidelines. One such approach could be applying certain investment principles to the management of an IT portfolio. Consider the following opportunities where both executives can contribute expertise:
- Portfolio management: CIOs might consider managing their portfolio of technologies and projects much like venture capitalists manage a portfolio of investments—continually evaluating individual and aggregate performance in terms of value, risk, and reward. CFOs can partner in this effort by helping establish risk evaluation standards that take into account the fact that, despite the most careful planning, some IT investments will underperform.
- Asset valuation: CFOs can work with CIOs to develop a method for comparing different technology investments and tracking performance outcomes.
- Venture funding: With their expertise in finance, CFOs can apply venture fund principles—stage-gate investing and a strong governance model—to strategic technology decisions, potentially leading to better controls and outcomes.
- Market analysis: Each partner can leverage his or her respective talents to enhance market analysis. For example, CIOs can identify “market disruptor” technologies; CFOs can then help articulate the business impact and possible outcomes of investing in such tools.
As CFOs and CIOs take these and other steps to grow their working relationships, they may encounter some quicksand along the way. In some instances neither party may have a clear idea of what the end result of their collaborative efforts will look like and how it will generate value. Or CFOs and CIOs may successfully co-develop a promising vision, but will struggle to create the strategic, operational, and technology governance required to bring it to fruition.
Such challenges are to be expected. When they arise, don’t retreat to your respective corners—the stakes are too high. Technological innovation will continue to shift the ground beneath the business, unearthing previously unimagined opportunities. A strong, symbiotic CFO/CIO partnership can make it possible for both leaders to shape tomorrow by harnessing opportunities today.