Despite recognizing the need for digital transformation as a competitive advantage, far too often, IT innovation is slowed by the realities of the bottom line. Chief financial officers (CFOs) do not have to serve as the innovation damper, and instead can build strong partnerships with chief innovation officers (CIOs) and their innovations teams. Here’s how CIOs and CFOs can break down silos and improve collaboration.
Tie innovation to bottom-line value
At some point, CIOs and CFOs must speak the same language. At a time when the c-suite is tasked with doing more with less, CIOs and CFOs must work together to create innovation that has clear return on investment (ROI). The problem is, only about one-third of companies say they have a strong partnership between these two executive leaders
Achieving a mutual understanding between the technology evangelist and the fiscal conservative in your organization can happen if these two sometimes disparate partners recognize a mutual understanding tied to business value. After all, the mandate is the same across departments: Work efficiently and meet strategic goals. Coming together within a mutual understanding requires CFOs to move away from traditional budgets toward a more agile process that will support innovation. CIOs and CTOs also must reframe their innovation efforts to embrace clear corporate strategies while adding value to the bottom line. For example:
- Making the case for IT investments as crucial to future business scalability and growth.
- Elevating IT by democratizing data at every level of the organization to inform business decisions.
- Delivering accurate data to support the CFO’s decision-making on costs, earnings, market share, profits, and revenue.
- Becoming better stewards of IT by lessening risks and protecting core assets.
CIOs sometimes struggle with communicating the ROI of IT projects, as well as priorities and costs. With their eyes on the financial health of the organization, CFOs expect CIOs to present a clear business case for investments
Lest this put CIOs on the defensive, the c-suite should also consider that CFOs have their own work to do to bring IT and finance into alignment.
Reframe IT and the budgetary process as more Agile
It is not just the CIO that must reframe their work within a value-driven world. CFOs must change how they create budget projections to support, not stymie, innovation. The Agile idea of failing fast by placing the biggest risks at the front of a project can help both IT projects and technology builds. Creating project-centric variable budgets with rolling forecasts will help CIOs and CFOs stay on the same Agile page.
Ironically, it is the startup disrupters who have finally earned the attention of CFOs seeking a newfound nimbleness in volatile markets. For example, fintech startups can run circles around traditional banking giants, simply because their organizations were built on a less stodgy bureaucratic framework. The concept of Agile in project management requires shorter work increments and more frequent release dates. CFOs can learn from this approach by creating something other than the traditional annual budget. This allows the flexibility necessary to adapt to technology changes as they arise. But there is a much larger lesson for CFOs stuck on traditional accounting models. One word: COVID.
Traditional budgets simply will not give you the competitive advantage you’ll need to move forward in an uncertain future. The necessity of reacting quickly to market shifts is a huge lesson from 2020 that CFOs must take into 2021 and beyond. Developing rolling forecasts and shorter-term project funding budgets tied to key performance indicators (KPIs) will allow for greater cost controls and speed. This shift will support IT innovation by accepting the reality that technology, like the market, is ever-changing.
Collaborate and deliver organizational value
CFOs and CIOs have an equal responsibility to come together in a mutually beneficial arrangement. To do this, CFOs must do everything in their power to support digital transformation, while CIOs must create IT roadmaps that support strategic organizational objectives and not just perceived technology wants and needs. Collaborating on IT investments will be less adversarial if both parties consider how the technology initiative would streamline processes, improve workflows, or yield some other benefit that would help the business achieve competitive advantage.
CIOs and CFOs must come together in their efforts to combat the external challenges we face, from increasing regulation and shifting markets, to industry disruptors and COVID-19. Business leaders must embrace the knowledge that the right kind of IT innovation can spur organizational value that increases the bottom line.
If you’re seeking stronger collaboration in the c-suite, a neutral third party like Windsor Group Sourcing Advisory could provide the critical insight you’ve been seeking to forge tighter bonds within your organization. Talk with us about how we can help improve the enterprise to accelerate growth.