In the past, the CFO has acted as stop gap for IT projects deemed outside the scope — and budget — of the enterprise. But the recent rapid acceleration of digital transformation has brought IT and finance together to create a better budget process for 2022.
Friction between IT and finance is the natural result of rapid evolution in the technology space. How can a CIO forecast their technology budget when digital transformation is defined by change? For traditional CFOs, this uncertainty and risk are antithetical to responsible budget planning. But according to CIO Dive, “Removing friction between the CIO and the CFO, building strong working relationships and avoiding counter-behaviors can unlock a reduced IT cost, increase an enterprise's ability to generate new opportunities and get them to market quicker.”
The CIO versus CFO was inevitable. Both work for the benefit of the same organization, but their goals quickly diverge from there. In general, their budget priorities are diametrically opposed. CIOs cannot be blamed for technology changes, deployment backtracking, and adoption challenges — all of which can blow up an IT budget. So, while CFOs must accept the difficulties of accurately predicting for an IT budget, CIOs must build convincing business case to link their budgets to enterprise goals and track usage trends to justify the spend. This meet in the middle approach gives both factions what they need to better comprehend and support the other, and it creates cooperation among these increasingly equal and influential executives and their departments.
Easing the tension
In much the same way new models for developer talent require collaboration and communication skills, this new world of C-suite cooperation between tech and finance demands a new level of mutual transparency. CIO suggests cooperation between these two historical rivals may even blur their job descriptions into hybrid IT/finance roles. While things may not go quite that far, easing tension and increasing collaboration between these key C-suite players holds myriad benefits for your organization. And the numbers back this up
Forbes Insights and Dell EMC surveyed the enterprise C-suite and found:
- 89% identify a chasm between their CIO and CFO.
- Companies with digital transformation success report competitive advantage and growth of up to 7%.
- IT budgets are increasing for 2022 with significant amounts geared toward IT transformation.
- Shared goals between IT and finance reduce IT costs and help companies be first to market with new products and services.
First to market means innovation, and innovation costs money. Reducing IT spending in other areas, such as data cycles or contracting redundancies, might help pay for innovation initiatives. Maybe. But CFOs and CIOs need open dialogue and a shared understanding regarding the realities of modern IT costs. Without this baseline for cooperation, tension between these departments is, once again, inevitable.
Benefits of a better budget partnership
A Stronger partnership between IT and finance is critical to success in the coming years. Market volatility, combined with ongoing digital transformation, will force cooperation in any case. The competitive landscape demands it. And while it’s true that CIOs need CFO buy-in to achieve their goals, the benefits of a successful partnership work in both directions. Finance needs the information captured by IT for data-driven decision making. CFOs and CIOs are obvious partners for driving efficiency, automating workflows, and reducing risk, but friction may recur if any IT initiatives are perceived as innovations for innovation’s sake.
CFOs must be prepared to listen to tech leadership, ask the right questions, and understand the complexities of budgeting for IT transformation. The reality of budgetary cushions is less about wants than the need to manage risk in the ever-changing technology space. At the same time, CIOs must “sell” their tech initiatives to their finance counterparts in terms of ROI, strategic impact, potential risk, and contingency plans.
Visit windzr.com to learn more about strategic budget planning for 2022 and beyond.