Intertwined challenges and opportunities mean finance and IT need to be synced more than ever.
By Martin Veitch, Editorial Director, IDG Connect
When I asked about CIOs and CFOs in preparation for this article, one pithy remark stood out. A retired CEO said: “They’re similar really. Ask them a question and the answer is ‘no’…”
That’s unfair of course but it points to the persistent cliché of both posts being conservative in nature. But then, when you’re trusted with handling the finances and the digital underpinning of an organisation, conservatism isn’t such a bad trait. But what became clear was that perceptions are changing and a generation of progressive finance and IT leaders is emerging. They are making a big difference to their organisations by unleashing creative thinking and working closely together.
Plainly, a good CIO should build relationships across the organisation and beyond. The concept of CIOs being the plumbers of the enterprise is, thankfully, going away and there’s an appreciation that IT can (almost uniquely) provide competitive differentiation that companies crave. CFOs meanwhile are tapping into technology to create the insights and vision that businesses need more than ever in these turbulent times.
Modern CIOs find themselves in an interesting position where their counsel is in demand because tech touches everything now.
Changing times
Modern CIOs find themselves in an interesting position where their counsel is in demand because tech touches everything now. It’s not over-egging it to say that almost any bold business move today will be fuelled by digitisation.
For example, CIOs and CMOs are working as a team as ‘marktech’ stacks evolve and as digital activity, including account-based marketing, becomes an even bigger part of the marketing remit. In HR, CHROs and CIOs are combining to onboard modern cloud HCM packages that provide a 360-degree view of performance, goals and rewards for employers and employees, and using AI and machine learning to accelerate the hiring process. And elsewhere, the CIO is working with procurement and logistics leaders to establish the possibilities of the Internet of Things in tracking vehicles and deliveries.
CFO: CIOs are like CFOs in the sense that they’re analytical and numbers-based: if you can’t count it, it doesn’t count. The best CIOs tell you early in the process when things are going awry because they’re always keeping tabs on risks and contingencies.
CIO: I get on well with CFOs. If you want to do something and you can build a watertight ROI case, then you will likely get it. Don’t and you won’t…
Hand-in-hand
Today, CIOs and CFOs need to work hand-in-hand for many reasons. First, because the CFO is often the second-most powerful person in the organisation and the CIO may be the biggest change agent.
Second, because, as with the roles listed earlier, technologies such as cryptocurrency and blockchain are game-changers for how CFOs operate.
Digital transformation is critical to both parties, even if they see it via different lenses. Transformation can support entry into new markets (adjacent opportunities or regional), operating models (self-manufacture or subcontract) and ways to sell (such as outright purchase to subscription or indirect channel versus direct). These plainly impact the CFO because income, outgoings and the way revenue is recognised are changed, but it’s the CIO who’s central to enabling all these.
And even on IT procurement, the sides need to work in tandem. As more software moves to a cloud subscription model, the way organisations pay for what were big-ticket items has changed enormously. We know that recurring payments make it easier for companies to buy top-end software without spikes in licence fees, annual maintenance charges or the need for ancillary hardware. The model also de-risks the software acquisition process because it’s relatively easy to swap out providers in the cloud and to integrate with other IT systems using open APIs. This is plain as day to CIOs but they need to share that knowledge with others and the CFO should be the leading recipient of this good news.
CFO: CIOs today are great but the generation of 20 years ago was very different. They spoke a foreign language and nobody knew what they were talking about.
CIO: You do get some CFOs who just say ‘no’ as a default and it can be like banging your head against a brick wall. You sometimes think ‘you might want to speculate to accumulate here, it can’t be all about saving money’.
There’s another angle here too. CFOs today have a whole new toybox of tools to play with that enhance visibility, warning signs, red flags, opportunities and their ability to forecast. Financial Planning & Analysis (FP&A) suites are beginning to automate decision-making processes and soon we can expect AI and machine learning to take much of the financial drudge work off the table, leaving CFOs free to influence and lead. CIOs are best placed to help them choose these tools because they know the vagaries of integration, vendor management and so on. In some ways, the choice of such tools and the ways in which they are deployed will be as important as deployment and management of ERP in the 1990s. Those that use the tech best will reap competitive differentiation; the worst will endanger the future of their businesses.
Connecting the dots between the CIO and CFO will differ depending on personalities involved, but there are some established ways to work together.
And as with so much in life, the pandemic has had a transformative effect on… transformation. The virtualising of work had a thin silver lining in that it showed how many of us can be effective even if we are separated physically. McKinsey has found that companies set up remote working in 11 days versus pre-pandemic expectations that such projects would need a year. That acceleration has pushed us all to think differently, and with everyone just a Zoom away there’s no reason for us to avoid a chat and to rethink fundamental expectations.
Connecting the dots between the CIO and CFO will differ depending on personalities involved, but there are some established ways to work together. Some companies favour a version of the ‘two in a box’ management model where one executive shadows the other for a spell to better understand their everyday challenges. Others will be content to book meetings or even work on a ‘drop by’ basis. Whichever way you choose, make sure you’re not being a stranger to your peers.
CIO: I worked for one CFO who was curt. I did my utmost to get into her good books. I thought I was getting through, but when she was asked to contribute to my performance review, I heard that I was scored with record-lowering grades... The last straw was when I came into work and was told without warning that IT was being outsourced.
CFO: I was asked to the CIO’s holiday lunch with his team. When I got there, they were all dressed up as Star Trek characters. Nobody had told me but they thought I should have known by the wording of the invite which I didn’t understand having never watched the programme. So, it was me and the cast of… whatever the spaceship is called.
