At first glance, the relationship between a CIO and CFO might appear to hold the potential for conflict. The CIO wants to leverage technology solutions in any way possible to enhance the business. The CFO wants to keep tight control on spending.
There doesn’t need to be contentiousness between these executives, however. Together, in fact, they can form a strategic partnership that can help organizations with their digital transformations, improve business operations, and at the same time keeps costs under control.
The Importance of Synergy
“I have always found the relationship between the CIO and CFO critical for several reasons,” says Robert Ruocco, senior vice president and CIO at Consortium Health Plans, a company that provides services to Blue Cross and Blue Shield member companies.
“First, having a close working relationship helps the CIO educate the CFO on seeing IT as a value center rather than a cost center,” Ruocco says. “Second, having a CFO in a CIO’s corner is a major power play when it comes to championing IT projects to the CEO and board of directors. Having the backing of the CFO will help reduce headwinds as both the CEO and board members will look to the CFO for his/her opinion and guidance.”
Unfortunately, senior leadership and board members at many organizations will use direct feedback from the CFO as the primary input on how they will support an initiative presented by the CIO. “I have always found partnering with a CFO [and] helping them understand the business value of an IT initiative as the best way to gain their support,” says Ruocco.
Collaborating on Value Creation
CFOs and CIOs have cross-functional views of their organizations, due to the financial and technology needs across the enterprise, says Christopher Davis, CIO at The Tile Shop, a national home flooring retailer.
“I believe that technology, financials, and people management are capabilities that all management team members should come to value and understand,” Davis says. “With that cross-functional view of the organization, CFOs and CIOs can partner to lead value creation within an organization.”
The interdependency of these roles “creates a great opportunity for CIOs to partner with CFOs to make sure the appropriate investments and services can be provided to the organization,” Davis says. “It is also critical to help the CFO understand that technology should be viewed more as an investment with returns rather than as a cost to the organization.”
Securing Funding for IT Initiatives
Indeed, CIOs rely highly on financial executives to get the budgets they need to meet IT goals.
“CIOs need funding for staff and other initiatives” that require capital and operating expenditures, says Jon Bowker, CIO at software company Ncontracts. “The downside is the business will suffer due to the CFO not releasing funds for projects and other initiatives. The benefits [of a strong CIO/CFO relationship] involve providing increased visibility, funding, a greater chance of meeting business needs, and aligning risk, reward, and cost.”
The CFO’s responsibility is to manage cash flow, make strategic decisions, and more importantly, manage risk.
“CIOs need funding for staff and other initiatives that require [capital and operating] expenditures,” Bowker says. “Not obtaining funding could cause risks to the business, customers, and products to be carried forward and, sometimes, increase. If CIOs can translate what they are trying to accomplish in a way that can be quantified, the risk can be determined.”
The Power of a Tech-Savvy CFO
Helping educate a CFO on “technical debt” within the organization can go a long way toward securing the necessary funding for modernization efforts, Ruocco says. “To gain the CFOs support and buy-in, a CIO must articulate the cost of the existing ecosystem and how over time costs will continue to rise year-over-year,” he says.
It might be a legacy platform that is aging and the vendor is increasing support and maintenance fees substantially, or perhaps a legacy platform that is so niche that staffing rates are far outpacing staffing costs for more modern platforms. “These are a couple of examples, and many others exist,” says Ruocco. “The key is in how a CIO not only conveys the rising cost of legacy platforms and investment, but also the cost of lost opportunities and efficiencies due to aged platforms.”
By partnering with the CFO, a CIO will be able to monetize the cost-lost opportunities and efficiency gains, to help make the business case to secure modernization investments, Ruocco says.
Building a Strong Working Relationship
Regular check-ins, both formal and informal, between CIOs and CFOs can help build the basis of a strong working relationship, Ruocco says. “Early on I focus on presenting the multi-year IT strategy, and in follow-up sessions focus on deeper dives on a particular technology or initiative.”
A CIO must master the art of executive storytelling in these sessions, to make the most of the meetings, Ruocco says. “The CIO must ensure the conversation is not too technical, but rather more focused on telling a story based on data, KPIs [key performance indicators], trends, value creation, future flexibility, and cost savings/avoidance,” he says.
Transparency and Shared Success
Having a CFO who truly understands technology even at a novice level helps when it comes to the decision-making process, Ruocco says. When CFOs have an understanding of the benefits of IT initiatives, they can become early supporters and champions helping drive the initiative forward.
Davis agrees that regular discussions between the CIO and CFO about the investments that the company needs are important.
“I personally review our project portfolio with our CFO and ask for their help in driving business case development,” Davis says. “By engaging in this way, the CFO and the finance team can help make sure that the technology investments are delivering the expected value the CFO is seeking.”
Davis also partners with the CFO to develop improved capital approval processes and look for ways to support financial and other reporting.
“Having a CFO in a CIO’s corner is a major power play when it comes to championing IT projects to the CEO and board of directors.”
Robert Ruocco, Chief Information Officer at Consortium Health Plans
“Additionally, we have special projects where my team is required to provide data for analysis of our performance,” he says. “By working in partnership with the CFO, we understand each other and focus on the shared success for the organization.”
Another key to a healthy CIO/CFO relationship is transparency, Davis says. “Challenges and successes shared in a consistent manner with a [CFO] helps them understand the effort required to deliver technology, and also the value the organization gains though the investments made.”
The Wrap
What may seem like a potentially contentious relationship actually holds the key to business success. CIOs and CFOs share the mutual goal of supporting the business and developing a CFOs understanding of the part technology plays an important role. Through regular discussions, technology education, and transparency, CIOs and CFOs can form a strategic partnership that creates wins for the business.
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