How to Build a Successful CIO and CFO relationship
By: Ernest Sampera on September 19, 2019
Strong executive leadership is a critical component of success for today’s organizations. A company with ineffective top management tends to make poor decisions and has difficulty staying focused on its goals. When there is conflict or a lack of trust at the C-suite level, even the best strategic vision can fall apart when it comes time to execute. As technology is becoming more integral to the success of most businesses, it’s more important than ever that CIOs, CFOs, and other senior executives develop strong working relationships.
The CIO and the CFO once occupied very specific places in the typical organization and functioned relatively independently on a day-to-day basis. Those days are rapidly coming to an end. A recent global survey by EY found that 71 percent of CFOs have increased their involvement in their company’s IT agenda in the last three years. The increased importance and value of big data analytics and network-driven customer services have forced CFOs to become more knowledgeable about how an organization’s IT infrastructure contributes to its financial success.
For CIOs, managing IT operations and technology initiatives is much more integrated into the greater strategic vision of today’s companies. Their department is responsible for producing and managing the data that drives decision making, so they need to make a concerted effort to ensure that data flows to the proper channels and that everyone recognizes its importance. Rather than thinking in the narrow terms of managing IT infrastructure, they must be more involved in building an infrastructure that works hand-in-hand with the company’s business goals.
Barriers to Collaboration
Unfortunately, in many cases, the CIO-CFO relationship was characterized by stereotypes. To the CIO, the CFO represented an obstacle standing in the way of whatever technology solution they believed the organization had to implement to remain innovative, efficient, and competitive. From the CFO’s perspective, however, the CIO was always quick to talk about why the company needs some kind of complicated (and expensive) new technology, but rarely offered evidence of how those upgrades would translate into measurable business success.
The core problem with these perceptions is that they often lead to self-reinforcing behaviors that undermine the organization as a whole. If a CIO goes into a meeting trying to secure IT funding using overly simplified and non-technical terms to describe their proposal and focuses on advocating for the lowest cost options, they might be able to get the CFO’s approval, but at the expense of implementing a sub-optimal solution. When that program fails to deliver expected results, the CFO is not only less likely to agree to such plans in the future, but also may have less regard for the CIO’s expertise.
On the other hand, if the CFO feels like the CIO isn't being fully transparent about the necessity, scope, and cost of projects, it can be difficult for them to make good strategic decisions. They may feel like the CIO uses highly technical terminology to deliberately confuse them or oversell the potential of whatever new technology system they’re advocating. If the CFO becomes skeptical about IT proposals, they could develop an excessive amount of caution that causes them to miss out on important opportunities.
Building a Better CIO CFO Relationship
Establish Common Business Priorities
At the end of the day, the CIO and the CFO have the same goal of driving business success. A good CFO must recognize the role that technology plays in achieving those goals. The CIO needs to remember that technology should be in service of those goals, not the other way around. When both positions are aligned on what they’re trying to achieve, it’s much easier to focus on the technical details of how to make it happen.
Leverage Data to Make Better Decisions
Today’s organizations depend on big data analytics to inform their decision making. The massive amounts of data being gathered by their networks make it possible to identify market patterns, assess risk, and spot opportunities. Better data analysis helps CIOs make better technology decisions and provides CFOs with tangible metrics to inform business strategy. By working together, they can identify what data has the greatest value and put systems in place to gather and analyze it more effectively.
Although they both occupy positions within the C-suite, the CIO and the CFO have very different views of the organization. Where the CIO lives in a world of specific details (such as troubleshooting an IT system configuration, mitigating cybersecurity threats, and so on), the CFO has a much broader, top-level view of things (such as how much an IT upgrade will cost, whether their systems are in compliance, and so on). By taking steps to better understand each other’s point of view, CIO CFO collaboration can get a better sense of their respective pain points and key considerations. When it comes time to develop and execute strategy, they can collaborate more effectively when they can see business needs from another perspective.
Assess Technology Comprehensively
Given the rapid pace of tech innovation, CFOs must be more involved in IT decisions than they were in the past. No longer can CIOs procure a technology solution that they manage independently for several years at a time. Significant investments are needed for companies to keep pace with change, forcing them to reevaluate the benefits of legacy systems, make difficult tradeoffs involving capital expenses and operating expenses, and take steps to avoid digital fragmentation as they incorporate new systems and services into their IT framework. To navigate these waters effectively, CIOs must work closely with CFOs to identify dependencies, organizational needs, and security risks if they want to build effective IT systems that help to foster innovation. For their part, CFOs need to educate themselves regarding the far-reaching impact of IT operations within the company and how technology can be leveraged for business success.
As today’s economic pressures continue to push CIOs and CFOs closer together, they must find ways to set aside old patterns of behavior that often set them at odds. Developing a shared view that situates technology in the service of an organization’s goals is the first step in building a collaborative relationship that allows them to share information more effectively and make better decisions.
About Ernest Sampera
Ernie Sampera is the Chief Marketing Officer at vXchnge. Ernie is responsible for product marketing, external & corporate communications and business development.