By Mohammed Atif, Director of Business development for India, Park Place Technologies
The initial Covid-19 crisis may have passed but the pandemic is far from behind us. The only certainty right now, 2021 will be challenging. Companies are striving to position themselves for the full range of possibilities. The coming year could bring renewed public health restrictions and economic calamity or, on the other end of the spectrum, positive results from vaccines or therapeutics could soon usher in growth and opportunity.
To successfully navigate this shifting environment, CIOs and CFOs will need to collaborate more closely than ever. This means dismantling any silos separating IT and finance and learning to better understand and integrate the perspective and language of the ‘other side.’
Fortunately, there are various ways to improve communications and build toward a shared IT-finance mission.
#1 Learn the other specialty
No one is asking a CIO to manage the P&L details or for the CFO to architect network changes, but greater facility with the goals and terminology common to the other leader’s area of expertise can contribute to more productive conversations.
There is also significant advantage in hiring and building cross-functional talent. Having tech-savvy financial analysts accessible to the CFO and financially-minded project managers involved in mapping IT solutions can help bring the two sides together in ways that improve strategic planning and tactical implementation during Covid-19.
#2 Value is the common ground
A 2018 Forrester study found a stark difference in focus among IT and finance leaders. Nearly two-thirds of respondents (61 percent) said IT was most interested in usability and employee experience. A similar proportion (64 percent) identified the finance priority to be spending reductions.
These goals may appear to be at odds but both can be subsumed under the larger concept of ‘value.’ Neither the CFO nor CIO wants to pay too much for technologies that deliver too little. Uniting behind the quest to find the right technologies at the right price can help sidestep cost-versus-performance arguments and help balance savings targets, employee experience, and customer-centric digital innovation.
#3 Evaluate together
If the CIO and CFO agree to set ‘value’ as their mantra, the next step will be to determine where the organization stands. Cooperating to audit existing technologies against financial and performance targets, they can identify shortcomings and solutions.
For example, it may be possible to concentrate more business with fewer vendors to enhance negotiating power, which will please the CFO. But CIOs will be equally interested in the integration and streamlined deployment and support advantages of such arrangements. Any cost-savings uncovered will then increase budget flexibility during Covid-19, while simpler vendor relationships, such as for infrastructure maintenance, will make it easier to address problems as they arise.
#4 Share the strategy
In some organizations, CFOs are given a seat at the strategic table while CIOs sit in the anteroom, offering advice only. There is good reason to reconsider this approach. Allowing both perspectives to be aired on equal ground—especially with technology audit results in hand—allows the entire senior management team make better budgeting and procurement choices and increases the chances of charting a unified, high-level strategy with full buy-in.
#5 Debate in a TCO scenario
CFOs can often assist CIOs in forecasting specific technologies’ total cost of ownership (TCO). They are also adept at assessing the business case for OpEx spending, such as on cloud services, compared with CapEx spending, such as to upgrade owned data center equipment.
This debate is especially valuable during Covid-19 when many businesses are looking to flexible, usage-based cloud services to provide agility, yet realize that such subscriptions may result in higher cost over the long run.
Senior leadership should assist in evaluating all available options. Extending hardware lifecycles, for instance, may avoid undesirable CapEx spending in the near term without necessitating a less-than-ideal cloud transition. The direction will depend on the organization’s needs, workloads, and status of on-premises infrastructure, among other factors.
The CFO should be able to provide the quantitative TCO picture, while the CIO can weigh in with how the different options align with the digital transformation roadmap and what trade-offs offer the fewest negatives during covid-19.
#6 Rework IT project ownership
One of the core sources of conflict for CIOs is often the internal perception that their field is primarily a cost center, not a revenue driver. This can set up an adversarial relationship in which the CFO focuses almost exclusively on savings opportunities.
The mismatch is most common where innovative IT project costs fall under the CIO but the revenue and efficiency benefits are accounted for under the lines of business (LOBs). Many companies have found success by reallocating strategic IT spending to business units to establish a clear connection between the financial outlay and return on investment. During Covid-19, involvement by LOB leaders as technology advocates will be particularly helpful in curbing cost-cutting overreactions that could take the focus off the customer and harm the brand.
#7 Rinse and repeat
Aligning finance and IT is not a one-time initiative but rather an ongoing process. Early stages of collaboration may be devoted to working through differences in language and perspective, as well as establishing shared reporting and evaluation mechanisms.
Once communications are on stronger footing, the CIO-CFO partnership cannot be abandoned until it’s time to prepare the 2022 budget. Bringing both leaders back to the strategic table on a regular basis, as well as fostering ad hoc problem-solving cooperation, will be essential in adapting strategies to emerging events and building on their shared foundation to secure success as the world finally defeats Covid-19.