Imagine the start of a meeting between a company’s CIO and CFO. They sit silently across the conference table from each other, like two prizefighters squaring off. What is each of them thinking?
[The CIO]: So, what’s my play here? I need funding for new digital projects, but the CFO is going to stand in my way again. I’m having a strange sense of déjà vu. We just don’t trust each other. All the CFO wants is to show everyone how smart and disciplined he is. Maybe I should advocate for a much bolder and more expensive proposal than I really need, so he can cut it down in scope to something I can live with, giving him the victory he needs. If only we could figure out how to work more cooperatively …
[The CFO]: These meetings are always uncomfortable. The CIO loves to talk in techspeak. If only she could speak my language – like how this new spending will drive real business value – we could actually get things done. I know our CEO wants us to invest more aggressively in technology, but failed digital projects in the past have left me a little jaded. I don’t feel like the CIO is being transparent with me on expectations. If only we could figure out to work more cooperatively …
For many organizations, feelings of suspicion, competitiveness and a general misunderstanding of each other’s motives define the relationship between these two important leaders. But unfortunate stereotypes in the C-suite can have dire consequences. When the CIO underestimates the CFO, for example, or when the CFO doesn’t fully appreciate the role of the CIO, dysfunction can thwart what should otherwise be a collaborative and supportive relationship for the sake of the organization.
The CFO thinks the CIO is constantly deploying the latest technology and always seeking incremental funding but not able to articulate the business value of IT. The CFO thinks the CIO slips into partial truths and simplification to communicate, and it feels a little like gamesmanship and diversion. It seems to the CFO that the CIO is simply trying to sneak past the budget gate.
The CIO thinks of the CFO as just a guardian of the purse strings. His or her primary objective is to say “NO!” to incremental spending; there’s no comprehension of multi-syllabic “technobabble.” The CIO thinks the CFO has a one-track mind set on cutting costs and doesn’t understand the business value that results from innovation.
As destructive as these stereotypes may be, they persist in many organizations, and complex antidotes have cropped up in response. One school of thought promotes the idea that if only the CIO could learn to speak the CFO’s language, the CIO could more easily and regularly secure funding. Those who think this way advise CIOs to talk in simplified, non-technical terms and to always advocate for the lowest-cost option. That encourages CIOs to pretend to give control of the decision-making to the CFO, presenting the CIO’s choice as the only logical one.
But this school of thought simply adds to the fallout. It assumes the CIO has a total lack of business context and strategy. Instead of feeding what some consider to simply be an ego war, the CIO should build his or her case as a response to the needs of the business and appeal to the CFO’s almost-certain desire to ensure that spending supports strategy.
Thankfully, organizations are shifting in this direction. They are recognizing the fact that if their decision-making process lacks an analytical framework to align decision-making to strategy, it also lacks the business-oriented perspective to bridge the gap between IT and finance.
Many CIOs are embracing this new approach, restructuring their organizations to become more business-centric, and increasing their focus on building and delivering services that meet specific business needs. At the same time, CFOs also are positioning their organizations to be more strategic and proactive in support of decision making.
Breaking through barriers that prevent meaningful conversation requires building trust and communicating for an aligned perspective. The CFO can help bridge the gap by:
- Improving cost transparency. The accountant-friendly chart of accounts managed by corporate finance fails to provide the insight a CIO needs to run IT like a business, making it difficult to frame conversations and understand performance. Establishing an IT financial management framework, such as Technology Business Management (TBM), that is built on a well-structured taxonomy that maps from the source financial system can provide a better way to look at financials and support the build-out of meaningful key performance indicators.
- Ensuring the planning process meets the needs of both IT and finance. Building in flexibility and providing a regular platform to facilitate conversations will encourage innovation while clearly communicating constraints. Rolling forecasts and other mechanisms to include the capture of changes or decisions during the year can support alignment.
- Picking the right people. Carefully staffing positions that regularly interact with and support IT with people who are willing to work to understand IT and who have the capability to educate IT leaders on finance issues and concepts will go a long way toward creating common ground.
Bryan Mueller is a principal consultant at technology research and advisory firm ISG.