In today’s business world, the success of an enterprise will be determined by the relationship quotient between the CXOs of the company, prime focus being on the synergy they will bring into the day-to-day operations. Two people who will play a major role in this journey are the CFO and the CIO of an organization; importance of their relationship will grow as the enterprise will embark on the journey to become digital. With technology playing a larger role in creating competitive advantage for business, even the CFOs will need support of their IT counterpart to operate in a day-to-day basis effectively. Likewise, CIOs ought to bring major technological changes in the enterprises in line with their corporate strategy for which they will need the support of CFOs on the investment front. Therefore, it is imperative that CFOs and CIOs should collaborate closely to build a successful digital enterprise of the future. Organizations which will not follow the path of synergy will have a one way ticket to doom. It could happen that a CEO takes the mantle of furthering the CIO’s role and becomes the peacemaker/pacemaker between the two. Then again, remember the correlation between a healthy heart and a healthy body. A pacemaker may do all the function of a heart; however it cannot fully complement a strong heart. We all know how effective a human being is at the mercy of a pacemaker versus when he is on his own. Likewise, the health of the organization will be dependent on the synergy between the two powerhouses in the organization – CIOs and CFOs.
With changing times, this synergy needs to be strengthened further as both the CFO and CIO roles have taken a more strategic form. Unlike the traditional CFO, the contemporary CFOs do not just focus on managing budgets and preparing accounts, they take active part in forward strategic planning for businesses. Similarly, the CIOs are no more concerned only about data centers, they are playing a crucial part in building a technology savvy company. The role of CIO used to be that of an executor of business. But with changing times, IT now has to move from back-end to the front end. All these points to one direction – adapt or perish. “Grow more or No more”.
I believe the roles of CFOs and CIOs have transformed to a Space Mountain ride where all of us are in the vortex in a VUCA world. To survive the sheer pressure of rapid digital transformation, one can follow the mantra of 3C – ‘consult, collaborate and conquer’. Consult your peers to understand various business challenges, and collaborate to create an organization wide solution. This will ultimately lead to conquering of all challenges.
This collaboration needs to be done across verticals in the organization. I am a person wearing multiple hats. People often ask me how I do justice to both CFO and CIO roles; while CIOs need management support for any digital disruption initiative both in terms of strategy and finance, many of the CFOs still consider technology as a cost center. My answer to them will be that of “collaboration instead of confrontation”. When I am wearing the hat of a CFO, I turn to my IT folks to understand how they will create business moments for our company. I have 20 businesses and it is my job to collaborate the expertise organization wide. Rather than applying solutions invented by someone somewhere, I prefer to congregate people in a single room and understand the nuances of our problem. To enhance this partnership further, certain steps can be taken
- Bring forth the scenario of interdependence- The CFO is bringing breakthrough ideas onto the table, in terms of technology, new business models or new cost models. None of these, the CFO has to recognize, can be done alone. He needs the partnership of IT to make it fast, effective and all-reach. That recognition of incompleteness without the IT piece in place should force the partnership to be on an equal footing. On the other hand CIO has to recognize that he serves two masters – CFO and CEO, one is the financial head and the other is the business. CFOs are often CIOs’ one of the larger customers, customers who many times happen to be bosses.
- Take joint responsibility for the future: Delivering technology results should not only be the responsibility of CIOs. CFOs can make a significant role in the strategy making based on their understanding of the business requirements. Consequently, they need to treat IT as an innovation driver for the organization.
- Blunt the threat of disruption by embracing digital – In the era of digital disruption the question of “Why” is no longer valid, everyone knows why we need to be digital-savvy. The focus is on “What” and “How” – what needs to be done to maintain competitive advantage and how fast we can achieve that.
- IT as an expense versus IT as an investment: The debate always is do we treat IT as a cost center or an investment center? If we do too much of investment it will throttle the profitability of the year, if we do too little it will throttle future. So CIO and CFO should come to an understanding what should be the optimal investment and how to look at the profit out of it. Consequently, we need to make investment focusing on future returns not immediate one.
- Use a MoP approach –Conventional ROI calculation may not be suitable for IT investments as calculating the profitability of a technology investment is not always an easy task since many of the investments are not amenable to an ROI calculation. Therefore, I always advocate a MoP (Measure of Performance) approach for IT investments. For example – while implementing the CRM for your organization, ROI should not be the criteria to determine the level of investment you should put in, rather the decision should be based on norms like how many deals go through it, how is the customer satisfaction affected by it etc.
- Be a proactive business leader than a reactive one – Do not hesitate to make big bets if the technology projects need vast investment. The focus should be on identifying future business needs and delivering accordingly rather than cost cutting and cost saving. At the same time keep a cautious eye on the expense. If required fire bullets before firing cannon balls.
- Treat your technology portfolio similar to a mutual fund – While, investment in different technologies is a must, there will be certain risks attached to it as well. The CFOs need to take a significant role in balancing risk and returns of technological investments.
- Destroy to create- follow the cycle of “creation – destruction – recreation”. With changing times, products, processes and practices become obsolete. Take joint calls on what of past IT practices you will not carry forward. Otherwise, if you are steeped in history, you will live to regret it.
The epic battle of Mahabharat was won by the combination of a good strategy by Lord Krishna and effectual execution on the part of Pandavas. However, in the modern era of Mahabharat of businesses no one is a mere executer and each has a strategic role like Krishna to play. The strategic collaboration between CIOs and CFOs will create a success roadmap for the businesses while ensuring the sustenance and growth of their business.