by Stacy Collett

7 tips for winning over your CFO

Feature
Nov 30, 2021
IT Leadership

A strong CIO-CFO relationship can propel growth and innovation. Hereu2019s how to get on the right track.

07 how strategy led transformations ease cloud adoption for financial services organizations
Credit: AWS

CFOs and CIOs understand the importance of getting their relationship right. For CFOs, IT is often one of the largest budget items. For CIOs, 22% of whom report to their CFO, according to Deloitte, earning budget approval is vital to fueling transformation. Yet today the two roles often run on different tracks: one on a straight and narrow path moving at a set pace, with established milestones and the finish line in sight; the other sprinting through twists and turns with the destination still to be discovered.

Many factors complicate the CIO-CFO relationship, such as the migration from projects to product-centric delivery, which has challenged traditional funding models thanks to the need to be funded on a continuous basis. CIOs are also taking center stage as key strategists and orchestrators of unprecedented transformational change, solidifying a direct line to the CEO and in many cases sharing attention with the CFO.

Underlying all this is a simple truth: “The textbook for finance has been the same for 100 years, but the information technology textbook is rewritten every three to five years. All this rapid change is not going to change the way finance is funding your budget, but it probably offers a more creative way of thinking,” says James Anderson, research vice president at Gartner.

There are many opportunities for CIOs and CFOs to work together to propel growth and innovation, but first they must learn to understand each other. Industry analysts offer seven tips to help CIOs get their relationship with their CFO on track.

1. Translate technology outcomes into business outcomes

CIOs traditionally show value through metrics and dashboards that have little meaning to CFOs.  Any cost that the CFO doesn’t understand or value is a cost to be eliminated or managed downward, Anderson says. That’s why it’s important to speak about value in the language of your stakeholder’s outcomes, not technology outcomes.

For instance, the tech team may have created business value with an app that processes loans, “but if the loan application goes down, it impacts the number of days it takes to close a loan, which impacts the profitability of the loan portfolio. This is the value chain and why we need to invest in patching and those types of things below the [run budget] line” to help the value above the line, Anderson says.

CIOs must create this type of narrative to explain why and how investment in technology can impact outcomes CFOs care about, he says.

2. Delegate decision-making to those most accountable for outcomes

The task of translating becomes easier when CIOs delegate more decisions to those most accountable for outcomes rather than placing authority away from where actual work is done, says Christopher Gilchrist, principal analyst at Forrester.

CIOs should build a 360-degree view of decisions, critical performance metrics, and key-prioritizations to generate greater transparency and feedback across operations. “Integrate all stakeholders’ interests from business and technology to continually prioritize between multiple trade-offs and managing opportunity costs. All of this promotes an environment where accountability is shared, reducing friction and increasing operational lift with common outcomes,” he says.

3. Balance risk with budget commitments

CFOs need to become more comfortable with the inherent uncertainty and iterative nature of digital projects, analysts say.

“CIOs are going to deliver outcomes to the investments being made. It’s just going to be done differently,” says Khalid Kark, US CIO program research leader at Deloitte. Going forward, “CFOs may not have control over how much value is derived or how quickly they’re able to get the value and the benefits.”

When working on iterative projects, CIOs can help CFOs by committing to a fixed budget, no cost overruns, and to deliver value in a fixed timeframe “even though you don’t know where the value will come from yet,” Kark says. “You’re going to rely on your trusted teams to figure out where it’s coming from and then iterate to get to other areas where you are getting value.”

4. Demonstrate ‘effectiveness’ over efficiency

As tech investment shifts away from “efficiency gains” to “creating better outcomes,” Forrester suggests that CIOs focus on what it calls effectiveness benefits. In simplest terms, effectiveness means increasing the probability of good outcomes, and reducing the probability of bad outcomes.

“Efficiency may be an input for some effectiveness benefits, but often effectiveness can replace efficiency as the benefit measurement with the most impact on business success,” Gilchrist says. CIOs should use metrics that show how technology is helping achieve effectiveness in terms of higher revenue or avoiding adverse business shocks.

5. Build finance knowledge on the tech team

Only about 20% of CIOs have someone on their team dedicated to finance, funding, and the financial impact and implications of IT, according to Deloitte’s Kark. “CIOs need to build competencies in their team to support that activity,” he says.

CFOs need to build competencies in understanding IT strategies, as well. Together with business leaders, “the combination of the three could really be powerful in driving a very different type of organizational and operating model going forward,” Kark says.

“CIOs are really good at understanding, supporting, measuring, and overseeing the value that is being driven through technology in various areas of the business, while the CFO can be responsible for measuring and holding people accountable and oversight over the value. Business areas can uncover key problems they need to solve for their business,” he explains.

6. Communicate with your CFO regularly and publicly

In the CIO-CFO relationship, personal interaction and communication matter, and so does the frequency and mode of that communication, Kark says. Zoom calls and online chats have dominated the past 18 months, but as restrictions ease, face-to-face meetings between the CIO and CFO can strengthen the relationship and send a strong signal to the rest of the organization that they’re aligned.

Kark recalls one CFO who went to the corporate gym every morning (pre-COVID), so the CIO started going to the same gym for that same 30 minutes where they could chat on the treadmill side by side. “That was important for the CIO to do” to stay in tune with the CFO, he says. Others may prefer a less-perspiring approach.

7. Hire an overseer of ‘investment vs. value creation’

When competing interests threaten the CIO-CFO relationship, some organizations hire an intermediary responsible for oversight of investment versus value creation. In many cases, chief data officers play this role because they already capitalize on data and analytics to shape strategy.

“You need an unbiased person who has knowledge of the business and has an independent view of where the value is for the organization,” Kark says. This person can be supported by a strong IT or finance team, “but the competency needs to be led by someone who can support the value conversation at the C-suite level, and then help the CIO and CFO make strategic choices consistent with the value.” 

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