Previously published in The Digital CFO Magazine
Today’s CFOs and CIOs have been on a similar journey over the last few years. After overseeing the mostly separate domains of financial and regulatory reporting and the technology landscape, both roles are becoming increasingly focused on their ability to strategically advise the business.
According to Foundry’s 2022 State of the CIO Report, 84% of Heads of IT say that the CIO is becoming a changemaker, increasingly leading business and technology initiatives. And 58% of line of business respondents characterize their CIO as a strategic advisor – a significant increase from 28% in 2021. (source)
A similar shift is happening in the CFO role. In the recent IDC InfoBrief, All Eyes on Finance: Accelerating Outcomes in the New World, the research shows a CFO mission that is evolving to embrace the role of the change agent with the goal of supporting transformational, value-adding business change. When survey respondents were asked how the finance function would change in the next 12-24 months, the top two answers were, Greater focus on real-time financial data (41%) and A closer relationship with IT to support e-commerce and other solutions that require access to finance systems (40%).
The role of technology
Alongside this evolution of both the CFO and CIO roles, the continued embrace of technology in the finance department and the need for IT to get more proactive in strategic initiatives has increased their interactions and their reliance on each other. A 2019 Robert Half survey found that 82% of CFOs collaborate more frequently with their company’s CIO than they did in 2016. “A strong strategic partnership between the CIO and CFO has been critical during the COVID-19 pandemic, especially as many companies have had to scale back on expenses and rethink their digital capabilities,” says Greg Douglass, global lead of technology strategy and advisory at Accenture. “As data has become increasingly important to manage and analyze for businesses to succeed, CFOs depend on CIOs to help translate the data and insights into actionable initiatives, driving optimal results for the business.” (source)
Barriers to success
But there are still barriers to collaboration and the CIO/CFO relationship can remain a challenge. In a recent EY survey, nearly a quarter of CFOs feel they either have no effective collaboration or only limited collaboration with the CIO when compared to their other C-suite peers. There are a number of reasons for this ranging from personality differences to ineffective reporting structures. However, these barriers will need to be overcome for both sides to see success.
Their fates are intertwined.
Aligning for best outcomes
So, if you are a CFO, how do you align with IT to achieve the best outcomes? And vice versa? “I think the motivation to come together is there. If you are a CIO or CFO today, you know you need each other to achieve your business goals and metrics,” says Philip Wood, Deputy CEO and Chief Financial Officer, Aptitude Software. “Aligning the finance and IT teams’ goals to each other’s and to the business is critical.”
This idea is not new. Organizational alignment is a key differentiator between high-performing and low-performing companies. Research by LSA Global found that highly aligned companies grow revenue 58% faster, are 72% more profitable, and outperform unaligned peers in employee engagement, customer satisfaction and retainment, and leadership. (source)
In addition to aligning objectives, the relationship between the CIO and CFO must be cultivated like any other relationship and at every level of each department. Learning the other’s ‘language,’ common personality profiles, and meeting frequently can help ensure both parties feel understood.
Simply bringing a willingness to learn from the other can bring huge benefits to both sides. With the pressure on for the finance department to become more proficient in technology and a requirement for IT to better understand the business priorities and gain managerial and partnership skills, there is a lot to be gained from an effective relationship between the departments.