CIOs and CFOs often act as though they are partners in a strained marriage. Both parties have seen their roles change within the organization over the past decade. Previously, the CFO had to approve all IT purchasing decisions, while IT executives were charged with making technology recommendations and implementations. Then came the free-spending technology boom that elevated the status of CIOs. This position was considered essential for any business, and the CIO's recommendations were viewed as mission-critical.
But today's downturn has made cost-cutting king, and many businesses have become disillusioned by empty ROI promises IT vendors made. Every IT investment is heavily scrutinized, leading many CFOs to once again seize control of IT budgets and get more involved in the IT decision-making process.
With more CFOs becoming technology-savvy and playing an increasing role in technology-spending decisions, CIOs and CFOs must learn to play nicely with each other. The thorn in the relationship's side lies in that most CFOs see the hefty dent IT expenditures make in the expense column, and yet they don't have a clear understanding as to how these investments contribute to corporate earnings. Few technology chiefs succinctly can demonstrate and justify the value and return of their IT expenditures, and worse, many have not yet adopted an IT governance model that lets them align IT with business needs.
Poor communication causes many of the problems CFOs and CIOs have. CFOs often think CIOs don't have a grasp on the company's overall strategic direction, while CIOs often feel isolated from corporate planning. For the marriage to work, CIOs must learn how to become strategic advisers who engage senior management and gain buy-in to technology projects while explaining the business impact in terms a financial leader can understand.
CIOs should think of their title as an acronym for "Communicate Information Often." What follows are several tactics CIOs and other IT leaders should try for improving relations with the CFO and other executives:
- Become more comfortable with financial lingo. Just as CFOs must now have a basic knowledge of technology, the CIO must be able to communicate in terms the CFO understands, such as total cost of ownership or ROI. Armed with hard data, CIOs will have an easier time selling projects to executive management.
- Qualify and quantify IT spending. The IT department cannot become accountable until it accurately can demonstrate how it is spending its time and budget dollars. To do this, CIOs are looking for technology investments that provide a holistic view into their IT operation to enable effective project portfolio management.
- Generate value. It's not about implementing the latest technology, but linking strategies to corporate goals by working and communicating directly with business managers.
For example, if a company improves profitability because of a business process automation system, the CIO should ensure that business managers comprehend the effect the technology investment had on this milestone. After clearly demonstrating the value IT investments have on corporate objectives, it will become easier to obtain buy-in on other technology expenditures.
- Consider chargeback. Think about adopting a chargeback model that includes billing staff time back to the appropriate business units. By running your IT department like a consulting practice, a CIO can ensure that the business units are aligned with technology spending. The result is better alignment of IT with overall corporate strategy.
- Partner across the company. Move toward coalition building. CIOs must be able to express persuasively and intelligently the technology agenda to peers, the press, industry executives and employees.
For example, if the CIO is lobbying for a complete overhaul of a CRM system, it only makes sense to work with the head of customer relations to produce a strategic proposal with supporting evidence - including some sort of ROI, such as productivity improvements and decreased customer turnover.
Making it work
When CIOs and CFOs aren't able to forge harmony, the losers in the dispute are quite often employers themselves. But if the communication breaks down and the two parties don't work in tandem - or in some cases work against each other - an organization automatically is put at a disadvantage.
CIOs who rise to the occasion by developing strong relationships with CFOs will reap significant rewards - and win a seat at the strategy table.
- Tatham is vice president of marketing and business development for Changepoint Corp., a Toronto provider of business process automation software. He can be reached at email@example.com.