With Covid acting as a catalyst, digital transformation initiatives became the priority for organisations. Only 15% of companies prioritised it heading into 2020, research by Consultancy.UK found nine-in-ten organisations now believe digital transformation is a key priority. Boards are naturally turning to CIO’s to lead the initiatives in partnership with the rest of C-Suite. Some organisations started early; others are moving faster. How are these IT leaders different from their peers? Why and how did they get further along on their digital journey?
While there are undoubtedly many variables that factor in, there is one commonality that many of these CIOs share: A strong partnership with a CFO who understands the intrinsic value that digital transformation can bring to the organisation. CFOs certainly agree – a recent Dimensional Research survey found that 80% are bullish about digital transformation. A full 92% believe that a great relationship with their CIO counterpart is key to business success[1].
Building a Foundation of Success
As technology continues to accelerate, so does the role that CFOs play within an organisation. They must have a solid understanding of their customers and markets, as well as technology’s role in connecting with them. This creates a need for closer collaboration between IT and finance departments, with the CIO-CFO relationship right at the top.
With digital transformation high on the list of priorities for most CFOs, a strong CFO-CIO partnership is more valuable now than ever before. But it’s a two-way street: financial decision-makers should learn the language of technology, and CIOs should learn more of the CFO mindset. In a broad context, whether it’s digital transformation or infrastructure, this involves taking a critical look at operational expenses and treating everything in the IT budget as something that demonstrates value.
Today’s CIO needs to partner with CFOs to help guide investments in their organisation’s digital transformation agendas to maximise returns and mitigate risk. This partnership gives organisations a better chance to implement a digital transformation roadmap that makes sense based on their unique and specific needs.
As is the case in any relationship, communication is key. The more transparent each side can be, the more likely finance and IT departments will align on realistic goals and expectations where digital transformation is concerned.
Home runs Are Great, But Small Wins Are Also Valuable
From the CIO and IT department’s perspective, the CFO is the gatekeeper that can help execute digital initiatives. But it’s important to know and understand that the CFO isn’t the only person tech teams have to convince. They’re simply the key ally they need to convince. Once a CFO understands the business value of a particular project, they then serve as a champion. One that can help secure buy-in from other stakeholders that have a say in giving the final approval.
This is partly why a sound digital transformation strategy is to roll out initiatives incrementally instead of looking at it as one large overarching project. Breaking a large project up into smaller individual pieces makes it easier for CIOs to demonstrate the business value of each component to the CFO. They can create a series of small wins across the larger digital transformation journey and lay the foundation for future digital funding. These should be high-impact projects that make teams more efficient, increase productivity, improve the customer experience, or somehow drive increased revenue — or some combination of these.
This strategy gained momentum during the global pandemic as budgets were constricted due to the looming economic uncertainty. At the same time, COVID-19 fortified the CFO-CIO relationship: More than three-quarters (77%) of CFOs said last year’s ultra-challenging business landscape strengthened their relationship with their CIO, according to the Dimensional Research survey.
“To ensure success, a CFO is often the gatekeeper to drive transformation initiatives in tandem with the CIO on expense and capital investments that are beneficial for the organisation,” said Jim Gray, Ingredion’s executive vice president and chief financial officer. “CFOs and CIOs can play a pivotal role in collaborating to control risks within an organisation while developing new strategies for business growth.”
Digital transformation is about relationships
All of this may paint a somewhat rosy picture of what the CIO-CFO relationship should look like, but we also have to be realistic. In the same way that it’s true that communication is a key ingredient to a successful relationship, another reality is that there will be tension from time to time. There will be times when a CIO approaches a CFO looking for budget, for example, but the CFO won’t be able to deliver.
Any working relationship goes through ups and downs. It’s simply a part of doing business. There will be joint wins to celebrate at times and contentious disagreements at others. But if digital transformation is a business goal, the CIO-CFO relationship is vital. Both leaders only stand to benefit from working as hard as they can to create the strongest partnership possible to achieve company goals.
[1] Dimensional Research Report sponsored by Rimini Street – 2021 CFO Peer Insights: Digital Transformation and IT Spending Priorities.
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