There’s a new competitive edge in today’s marketplace: the power and speed to decision-making businesses get by bridging the gap between their CFO and CIO.
It’s no doubt that the Chief Financial Officer (CFO) and the Chief Information Officer (CIO) each play a critical executive role within their organization. In fact, any major decisions made within these offices have a ripple effect on the company’s success or its ultimate downfall.
While CFOs skillfully manage finance and business strategies, CIOs then follow up, assess, and integrate the technology required to support those goals.
As companies continue to adopt digital transformations, there’s no question that these two historically lone executives need to join forces. In order to form an effective partnership with the CIO, the CFO needs awareness of how technology can enhance and secure business transactions, and make financial analysis more effective. For example, the CFO now has to know how resources such as cloud computing, cybersecurity, and advanced data analytics work. And who is better to keep the CFO informed other than the CIO.
On the flip side, in order for the CIO to be most efficient in implementing technologies that best serve the financial interest of a company, he or she needs to collaborate with the CFO. For example, say the CFO wants to develop new or enhanced technology to support a new store or service area. The CIO in turn comes up with technological solutions that best support the business expansion.
A company’s CFO and CIO can, together, help smooth a business’s ascent to success and lead the company forward in innovation. Here are just three examples of how forming a partnership between the two can lead to lasting growth.
With the full support of the CFO, a CIO can confidently relate their activities to business growth goals within leadership or board meetings. This is beneficial for everyone at the table, as it brings a uniquely helpful perspective into the conversation. Business trends show that companies that embrace technology, such as automation, tend to have higher business productivity. Additionally, their products or services are perceived to be more distinct and recognizable.
More often than not, the CFO is a major stakeholder in shaping the organization’s overall growth goals and objectives. This puts him or her in a solid position to skillfully advise the CIO on key performance indicators (KPIs) and measures that will prove out business strategies. In this case, it’s important to get daily KPI updates to be sure you’re not relying on outdated information. The CIO can then incorporate this advice by coming up with valuable IT solutions to address the issues raised by the CFO.
A huge chunk of the CIO’s budget may become sunk costs if not well-tailored to serve strictly the needs of the company. And who is better to advise the CIO on budget management and priority spending other than the CFO? The CFO can help the CIO to understand the company’s main opportunities and challenges. And allows the CIO to have all of the puzzle pieces in place, so they only invest in technologies that address the specified issues.
The CIO’s ideas can help minimize business risks and maximize value in a few ways:
The standard in today’s business environment is that the financial officers have to wait for a data team or consulting firms to piece the full story of their business operations and economics together, wasting time and valuable resources. Integrating the systems used by the IT and finance departments into one system can help to eliminate this challenge by automating processes and standardizing data. This makes company operations more cost-effective, efficient, and timely.
The CIO makes the work of the CFO easier by introducing technologies such as a central repository and other automated systems for collecting and analyzing data. A central repository for example makes it easier for every team within an organization to access the same data analytics in one single database. Implementing an extract/transform/load (ETL) process on top of this can significantly speed up the processing of millions of rows of data.
The CIO also strengthens the CFO by introducing technologies that help to prevent cyber risks. Technology has advanced so much that any organization with loose or outdated security systems may lose their intellectual and enterprise assets to third parties or even fraudsters who might use it against them. The CIO works with the CFO, CEO, and other executives to check and prevent such cybersecurity challenges.
The sync between a CIO and the CFO also creates room for accurate reporting and analytics. The CIO provides the CFO with practical tools that best present the analysis of data gathered across various facets of the organization. This system makes analytics easier to understand and picture. This, in turn, leads to more efficient reporting in offices and at board meetings.
Organizations need to engage in long-term investments in technology, strategy, infrastructure, and team development. The benefits of this cannot be overstated as it creates room for effective management.
By using data standardization, data accuracy and analysis can be actualized. The incorporation of a central repository, as noted earlier, is a way to intelligently track data for easy access by the CFO and CIO.
The CFO needs to be convinced that continuous innovation can help reduce business expenses and risks. And the CIO on the other hand needs to know how to apply AI and machine learning in a sensible, ethical way that is adopted throughout the organization. Their (CFO/CIO’s) aim at all times should be to promote the core values of their organization.
The EY DNA of CFO survey shows that about 74% of top finance executives state that technology is now dominating business operations.
As a result, around 96% of company leaders foresee a substantial shift from the traditional way of doing business to a virtual-digital model. And the force at which blockchain technology and cryptocurrency are proliferating business transactions today paints a better picture of this IT and finance synergy.
A dysfunctional partnership between the CFO and the CIO leaves the organization stagnant or crumbling, while its peers with a vested interest in forging a CFO/CIO alignment are better poised to overtake and dominate their industry. The time is now to align the CFO’s and CIO’s interests, which will undoubtedly put your business at a significant advantage for years to come.