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The Importance Of A Strong CIO/CFO Relationship

They may hold different roles, but their relationship needs to be strong

6Jul

IT and finance functions both have a large footprint, impacting on some 80-90% of most organizations’ daily operations. Given the importance of both departments to the majority of companies, there is often far too little integration between the heads of the organization - the CFO and CIO - and firms are losing out dramatically as a result.

In a recent survey by Deloitte, less than a third of respondents said the CIO and CFO at their company share a strong partnership characterized by mutual understanding. It is clear that there is a massive disconnect, and it’s vital that the apparent lack of cohesion between the two is fixed. The ramifications if it’s not are potentially severe, with IT underfunded and finance under-resourced. Without proper communication between the two, IT governance suffers and any investment strategy plans are impossible. When it comes to buying technology, CFOs are often left looking simply for whatever technological solution they can get that comes in under budget, which often ends unfit for purpose.

In order to bridge the gap, both CIO and CFO need to better understand one another’s roles and what they can do for each other. The CIO can help CFOs understand how technology is evolving, the architecture they're investing in, and why it’s a necessary investment. Equally, CFOs have to help CIOs bring structure to things in a way that helps satisfy them about the financial implications.

Barbara Gomolski, managing vice president at analyst firm Gartner, says she has seen this knowledge transfer in action already, noting that as CFOs grasp on their organization’s technology has increased, CIOs have responded by improving their own financial transparency and understanding: ‘Versatile CIOs have adapted to the increased role of the CFO by increasing the level of IT financial transparency, and giving the CFO the kind of information he or she is seeking about the cost and value of IT investments. CIOs that continue to talk about technology investments only in the language of technology will find it challenging to get the right level of funding for the right IT investments.’

More important than understanding what each other does, however, is appreciating why they are important. CFOs have to appreciate that costs are important, but technology is what drives the business and helps maintain a competitive edge. Speaking at the recent FP&A Innovation Summit in San Diego, Laura Hazlett, CFO of California College of the Arts, discussed her own experiences developing her relationship with her IT counterpart, saying that, ‘through the partnership we formed and through recognizing what the challenges were, we were really able to form a nucleus to start identifying solutions.’ By developing a strong CFO-CIO partnership, companies gain the ability to align IT investment with strategic growth plans and business performance. By leaving it to rot, they are doomed for failure.

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