CIO vs. CFO – what is the best way to balance their competing priorities in the digital-first organization?
Each executive has their own individual interests and objectives, and they often don’t speak the same language. To successfully build a technology-driven organization, however, both must learn to understand one another and work together.
Below, we’ll explore their differing priorities and how these two can see eye-to-eye.
CIO vs. CFO: How to Balance Digital and Strategic Priorities
The first step towards building a strong working relationship between the offices of the CIO and the CFO is to establish a dialogue and understand each office’s priorities.
The CFO’s Priorities
The Chief Financial Officer (CFO) is the organization’s financial controller. Their goal is to maximize business performance and maintain fiscal efficiency.
That aim is naturally challenged by turbulent economic times, such as those we experienced in 2020.
Though the priorities of every CFO will differ from organization to organization and sector to sector, solvency and performance still remain top objectives during volatile economic times.
The CIO’s Priorities
The Chief Information Officer (CIO) leads an organization’s IT operations and, in recent years, digital business initiatives.
Today, many CIOs are transformational CIOs who lead digital transformation initiatives, digital innovation projects, and organizational change programs.
The CIO’s interest lies in business growth, which is fueled by digital innovation and technology investments – and this is especially true during uncertain economic times.
The CIO vs. CFO: Competing Priorities
In 2020, many CFOs began to see the value in digital transformation, though this is not always the case.
Here are a few potential points of contention:
- CFOs can view IT expenditures as costs rather than investments
- CIOs who collaborate too closely risk distancing themselves from CFOs, who should be their true partners in technology investing
- CFOs often lack an understanding of the innovative potential of certain technologies, especially if that potential is not explained to them
- CIOs operate at a faster pace when it comes to both finance and technology
Finally, as mentioned, both of these officers speak a different language and have different mindsets. Finding a middle ground is the essential first step towards working together.
The CIO and the CFO: Building Bridges
Below, we’ll look at a few tips that can help CIOs and CFOs begin working together more effectively.
CIOs should educate CFOs on the value of IT
Digital transformation holds the key to innovation and success in tomorrow’s digital economy.
Yet, as mentioned, CFOs often perceive technology as an expense, rather than an investment.
This makes sense, since technology is still evolving and is by no means easy to understand.
CIOs can overcome this barrier by educating CFOs – as well as other C-suite executives – on the value of new technologies.
By translating that value into a language that CFOs can understand, such as specific ROI projections and risk scenarios, it will be easier to establish a dialogue and move forward.
Establish a common set of KPIs and performance metrics
Financial performance is a concern to all senior executives.
CFOs, however, are naturally more concerned with financial performance since that is their domain.
One of the best ways to establish a common language is to create a set of KPIs and metrics that both parties can use to measure the performance of IT investments.
Those metrics can help each executive assess digital change strategies on an ongoing basis and maintain a healthy conversation about future plans.
Leverage new technology to improve finance operations
Another way CIOs can directly aid CFOs is by bolstering the finance department.
New technology, such as AI, big data, and analytics, for instance, can be used to offer more financial insights and improve performance.
On the one hand, CIOs who support digital transformation in the finance department are offering an “olive branch” of sorts – this type of project can be the first of many where the two departments learn to work together.
On the other, it can also accomplish the same objective mentioned earlier: educating finance officers on the potential ROI of technology.
CFOs can work with CIOs to create a common budgeting process
Typically, both departments have different budgeting processes.
CFOs want to fully evaluate technology investments from all angles before committing.
Yet in today’s volatile and fast-paced world, that is not always possible. Sometimes it is necessary to move faster.
A light, agile budgeting process can help both parties stay fast, while still staying on top of financial performance.
Both offices should adapt business strategies for a volatile world
Today’s world is changing quickly, and that pace of change accelerated in 2020.
To stay successful, businesses will need to adapt and rethink the way they operate.
Innovation, in other words, will be essential for every business department, including both IT and finance.
Yet to drive innovation forward, speed and agility are also needed.
The more effectively that both offices can collaborate, the easier it will be to stay nimble, fast, and flexible in the years ahead.