13th

From a distance, one might expect the relationship between CFO and CIO to always be strong.  After all, aren’t there a number of similarities?  Numbers are at the core of both career fields, and both are driven by logic, rules, and standards.  Analysis and problem-solving skills are highly valued, and the quality of results is important.  Coming up through the ranks of Finance and IT typically required significant time spent alone at one’s desk, which may contribute to the attraction of these professions to many tending toward introversion. 

There is no doubt of the importance of the CFO-CIO relationship.  A Deloitte CFO Signals survey states that “45 percent of CFOs surveyed had IT as a direct report, and about 25 percent more as a dotted line report.”  A Gartner study conducted for the Financial Executives Research Foundation found that CFOs have increased their role in technology decision making and that the CIO most often reports to the CFO.

Yet despite the similarities and the importance, there are major issues in the CFO-CIO relationship.  CFOs have long been frustrated by an inability to get a “single version of the truth” from the data in many companies (The Customer-Activated Enterprise).  This frustration is exacerbated with the mandate to accelerate the company’s performance while increasing transparency.  In fact, Deloitte reports that only a little over half the CFOs in one survey felt that they have the information they need to effectively manage the business. Another study by Gartner and Financial Executives International cites that only 25% of CFOs surveyed were confident that their CIO and IT department had “the organizational and technical flexibility to respond to changing business priorities” or are “able to deliver against the enterprise/business unit strategy.”  The study also noted that only 18 % of the CFOs surveyed believe that their “IT service levels meet or exceed business expectations.” In addition, only 1 out of 4 CFOs saw their CIO as a key player in developing and implementing business strategy.

So what actions can the CIO take to improve his relationship with the CFO?  Here are some practical suggestions:

  • Spend time together.  Solid relationships require getting to know one another…and that means spending time together.  You need to understand what is important to him.  Try to get to know him beyond the business setting.  It is amazing how beneficial a regular lunch out of the office can be.  Be sure to focus on him…not yourself nor your department (see The Relationship between the CIO and the C-suite).
  • Contribute to his success.  Discuss the metrics he currently uses to determine the company’s success.  Ask about any issues he has in getting these numbers.  Find out if there are other metrics he would like to have but are not readily available.  Learn the measurements he uses to determine the success of his own team and how easily he can collect this information.  Talk about what he sees as his challenges and opportunities.  Listen; learn; then commit to specific actions you will take to help.
  • Ask for his help.  A long-standing complaint about IT has been their inability or unwillingness to communicate in a manner easily understood by others.  Robert Comeau, principal with Deloitte Consulting LLP, notes “Even many CFOs who say they have a good relationship with their CIO confess to struggling at times to understand what the CIO is saying”.  Realize that finance is the language of business.  If you don’t understand the numbers, not only are you limiting your ability to communicate, you are also limiting the effectiveness of your decision-making and contribution to the company.  Who better to mentor you in the language of business than the CFO?  Ask him to help you understand how to view the numbers from his perspective.  Ask his thoughts on the information needs of shareholders, the board, and day-to-day management.  Get him to coach you in building a business case for IT investments.
  • Establish business-oriented metrics.  Far too many IT departments struggle in coming up with metrics that are meaningful to the rest of the company.  Spend time talking with your CFO about metrics he would suggest in determining the success of the IT department.  Forrester did some work with the TBM Council on aligning business and IT metrics that could provide a basis for fruitful discussion.
  • Drill down on costs.   Too often the IT budget appears as a black hole to the CFO.  Determine the unit cost of each IT service.  Understand, for example, the additional cost of adding a new employee anywhere in the business.  Benchmark these internal costs against the costs of obtaining these services from an outside provider, and discuss the results with the rest of your C-suite.  To provide more flexibility, actively look to move dollars out of fixed costs and into variable costs wherever possible – and out of Capex into Opex.
  • Concentrate more on moving the business forward.  Studies show that 70% or more of many IT budgets are dedicated to keeping the lights on (KTLO) leaving a relatively small amount for growing the company.  Seek to radically reduce the KTLO budget to free dollars for more strategic use.  Ensure input from all C-suite executives on project priorities.  Establish an environment and culture that makes it easier to obtain technology services from outside while still addressing corporate integration and security needs.  Work with the CFO to implement processes to assess the success of each project in achieving anticipated benefits.
  • Become more data-focused.  Remember that the CFO is a “numbers person”.  Improve knowledge throughout the company of the data that currently exists.  Ensure a common understanding.  Provide and promote “one version of the truth” regardless of what area generates a report.  Work with the CFO to improve corporate decision-making through analytics, business intelligence, and corporate performance management capabilities.

What other thoughts do you have to help the CIO improve his relationship with the CFO so that they are “happy together”?

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