The Stream by River Logic

How To: Diffusing the Tension Between CFOs and CIOs

October 11, 2016 | By River Logic

According to a Gartner study, 45 percent of CIOs report directly to the CFO, rather than to the CEO or COO of their company. This can lead to conflicts, as CFOs don't always understand the needs of the IT department. The following tips can help you diffuse tension between your CFO and CIO.

Focus on ROI

The first question any CFO will ask about an IT project is "What's the return on investment?" CIOs can sometimes overlook this vital piece of information because they focus instead on the technical features of a new solution. Training CIOs to always work out the predicted ROI of a

project before they present it to the CFO ensures that both leaders are speaking the same language. Encourage CIOs to present financial data in a format that the CFO understands. This might involve creating reports, graphs, tables of projected returns, or other visual representations of financial information related to past or future IT projects.

Maintain a Long-Term Focus

CFOs can sometimes block IT upgrades because they are too expensive, without realizing that they are seriously holding back the business and therefore harming its profits in the long run. When considering IT needs, CFOs should think about the long-term IT needs of the organization, not just this year's budget. To help the CFO frame the problem correctly, the CIO should present information about the latest IT trends in the industry, including giving an insight into what competitors are doing, so that the CFO knows which projects they will need to get behind over the next few years. This long-term perspective can show the CFO which projects can be safely put off and which ones need to be implemented as soon as possible.

Increase the CFO's IT Smarts

The modern CFO needs to have a good understanding of IT. All businesses need to support CFOs to bring their IT knowledge up to speed. This might involve the CFO attending conferences to learn about the latest industry developments. It's also important to ensure that the CFO gets hands-on experience of all the technologies that are used in your organization, so that they have a full understanding of what workers face every day when they interact with company systems.

Consider the Cloud

In order to keep the CFO happy, as well as doing what is best for the business, CIOs should try to keep IT costs as low as possible without compromising the business's ability to function. One way to do this is to adopt cloud technologies, which reduce upfront IT investment costs for the organization. You can use the cloud to store data, manage your own virtual server, or access software via Software as a Service (SaaS). Cloud solutions have many financial benefits for businesses. They provide flexibility, compared to investing in your own servers and hardware, and they spread the costs of IT evenly over each quarter and year. They also allow the business to cut back spending on IT during difficult periods, as many cloud payment plans only charge organizations for the amount of data or server space they acutally use. If you're not able to use the cloud for all your IT operations, consider a hybrid solution, which combines cloud and on-site elements. For example, you could store some sensitive data on your on-site server, while moving the rest to the cloud to reduce your overall infrastructure spend.

Keep Talking

Communication is key to diffusing tension between CFOs and CIOs. These two leaders should meet frequently to discuss the business's IT requirements and financial status. By keeping lines of communication open, you can promote understanding between the CIO and CFO. Don't put off communication until there is a conflict that needs to be dealt with; instead, keep the CIO and CFO in constant contact, so that each has a full picture of what the other is working on at all times.

Allow Direct Reporting

Sometimes, it makes sense for the CIO to report directly to the CEO, rather than to the CFO. If forcing your CIO to report to your CFO is causing tension, try setting up a system of direct reporting instead. Experimenting with different organizational structures within your organization can be a good way to find a system that works well for the individuals involved in leading your business.

Conclusion

It is possible for CIOs and CFOs to work together and have a harmonious relationship. By opening lines of communication and getting CIOs and CFOs to speak the same language, you can diffuse tension between them. Remember to promote as much communication as you can between the CIO, CFO and CEO, as well as encouraging each leader to see things from the other's point of view. When you do everything you can to promote communication, you maximize the chance of harmony persisting in your organization.

six levels of financial knowledge

You May Also Enjoy Reading
What is S&OP and Why Should Finance Care?…(Read More)
Why Now is the Time for CFOs to Axe the Average Cost Method…(Read More)
Why do Integrated Business Planning Initiatives Fail?…(Read More)
    Topics

    Posts by Topic

      Supply Chain Brief