Over the past decade, digital transformation has become the heart and soul of today’s enterprise and shows no signs of moving from its position of front-and-center prominence. The rise of customer influence continues to challenge businesses to meet consumer needs and expectations across channels and devices. In fact, according to the ComputerWorld Forecast Study 2016, the most important goal for tech projects driving digital transformation is external facing – improving the customer experience and satisfaction. At the same time, issues ranging from cybersecurity to cloud solutions and data analytics have evolved into core concerns.
These technology shifts and expanding digital capabilities have fostered a growing collaboration between the CFO and CIO, who head up two of the most important departments in the company — finance and information technology. At the same time, both executive roles have broadened and shape-shifted as technology has permeated every corner of the business.
Traditionally the CFO and CIO have sometimes butted heads, as the CFO has worked to reduce risk and avoid overspending, while the CIO has worked to wring as much as possible out of technology assets. But the budding and blossoming relationship between the CFO and CIO is critical, say experts, as the financial health of the enterprise becomes more closely connected to technologies such as Big Data, analytics, mobile and cloud-based solutions. The usual push-pull between budgets and IT investments still exists, but for many companies this has morphed into a more collaborative mindset and mission that is necessary for future success. The 2016 State of the CIO survey by IDG backs this up, showing that technology and business leaders and agreed on the top business drivers for technology investments in 2016: increasing operational efficiency and improving the customer experience. The trend: increasing customer demands are forcing companies to adopt new business models and deploy advanced technologies.
In the C-Suite, Traditional Roles Have Expanded
Financial reporting, compliance, treasury duties and capital structure have always been central to the role of the CFO. But over the past decade, that role has broadened significantly — today, the CFO is also seen as a strategic information leader who can help the company focus on enterprise growth initiatives, as well as a catalyst that can stimulate and foster change.
According to KPMG, there’s a new breed of CFO emerging from today’s disruptive environment; they’re calling it the “Renaissance CFO:” “Any senior finance executive must assume many roles: from comptroller to technology evangelist. But the Renaissance CFO is an individual who embraces and transcends all these roles to be a leader within the organization beyond the finance function.” CEOs at top organizations expect these next-gen CFOs to not just pay for, but to embrace technology like cloud-enabled ERP and data analytics.
On the CIO side, IT infrastructure was the main concern a decade ago. Today’s CIO, on the other hand, is far more visible to the rest of the business, with an increased focus on everything from mobility and data analytics to the cloud. That means CIOs now have more of a say in the C-suite about what’s going on in the overall business — as an influencer and a strategist. According to the 2016 State of the CIO survey, the vast majority of CIOs (84 percent) agree that the role is becoming more important to their business. And while security management has risen significantly in prominence as an important area of CIO focus, aligning IT initiatives with business goals remains in the top spot.
Essentially, it’s not only that the CFO and CIO have consciously moved closer together. As their roles have shifted, their respective interests and focus have aligned more closely and have become more likely to connect or overlap. That’s evident in things like who’s controlling technology spending. Last year, respondents to IDG’s State of the CIO survey predicted that IT would directly control an average of 66 percent of technology spending in their companies in three years time. But respondents to this year’s survey reported they control an average of just 57 percent of technology spending. And the CFO is at the top of the list with Operations and Marketing in controlling a chink of the tech budget.
Room for Stronger Relationships
However, there is still significant room left to build stronger, long-lasting relationships between the CFO and CIO. The State of the CIO 2016 found only 31% of CIOs collaborate regularly with the CFO in smaller organizations, while only 19% do at larger enterprises. The survey also found that CIOs and other business leaders such as the CFO are not always in complete alignment about IT spending: For example, IT and LoB leaders agreed on the top business drivers for technology investments in 2016 — increasing operational efficiency and improving the customer experience — but diverged when it came to security (CIOs ranked it higher than LoB leaders).
Many misunderstandings arise from the different backgrounds of the CIO and CFO and the fact that each may not understand the challenges and complexities their counterpart faces. For example, many CFOs say keeping up with technology is the most important and stressful part of their jobs — more important even than regulatory compliance, harnessing/managing big data, and finding and keeping skilled staff. At the same time, CIOs need to understand how to collaborate with financial teams to understand what reports and information they need to make decisions as well as to provide them with the technological know-how they require
Clearly, however, no one person or department can lead all the changes that are required for digital transformation in the data-driven age. That means the CFO-CIO relationship is more important than ever, as is the relationship between IT and every LoB, in order to help the organization adapt to new technologies at a fast pace as well as maintain value for shareholders.
For the vast majority of enterprises, the journey toward digital transformation will continue for years, even decades to come. The goal is to build on the momentum toward collaboration among IT, finance and business leaders that’s being driven by digital transformation. And with the emergence of the Renaissance CFO, and that group’s focus on transformation and innovation, collaboration between the CIO and CFO is primed to reach new heights.
In fact, collaboration among all C-level executives will likely become the norm. This rising tide of collaboration – where CMOs, CIOs, CFOs and the emerging CDO – Chief Digital Officer all work toward shared business goals — is an unqualified good thing. It promises to elevate the CFO-CIO relationship to new critical heights; and everything possible should be done to encourage and foster this budding and blooming connection.
Discover Real Insights for CIOs, a program featuring the latest research, news, and analysis from KPMG—all focused on ways to help you improve your technology performance. Topics range from digital, mobile and big data to artificial intelligence, IT transformation, and innovation.