Tales from the C-Suite: The working relationship between CFO and CIO

Technology has transformed the way organisations operate. It has changed the way they deal with customers, but it has changed the way internal teams deal with each other.

It used to be, each department would look to the chief information officer (CIO) and his IT team to supply them with hardware and software.

However, the IT department’s role has changed to include customer service, sales, business strategies.

With these changes the role of technology has also expanded into other departments, to include finance. And with that change, comes an integral partnership between the CIO and the CFO.

An Ernst and Young research paper found the CFO-CIO relationship is becoming closer and more collaborative. But there are two threats to this critical union.

“Cost discipline, rather than strategic value, still defines the IT investment mindset, and lack of mutual understanding between CFOs and CIOs is still an all too common problem according to our global survey of 652 CFO and financial leaders,” it stated.

As organisations make bold technology investment decisions that are driven by corporate strategy, while managing a range of severe risks, such as cyber risk and data privacy concerns.

“This mission-critical convergence of technology, investment strategy and risk has elevated the CFO-CIO relationship to new levels of importance. Any disconnect between the CFO and CIO will have profound consequences for the organisation and jeopardize advancement. Ernst and Young stated.

Although the relationship has grown closer, there are two concerns for the future of this union.

  • First, CFOs continue to struggle with balancing their responsibility to maintain cost discipline with more strategic ambitions, such as setting the agenda for change.
  • Second, lack of understanding between these two C-suite peers is an all-too-common problem. CFOs point to insufficient understanding of IT issues among finance executives as the main relationship barrier.

Tony Klimas, global finance performance improvement advisory Leader at EY stated in the research that CFOs are recognizing the growing strategic importance of IT.

“CFOs are becoming much more aware of the strategic value of IT and what it has to offer,” stated Klimas. “There is a growing focus not only on what IT costs, but also on the value it brings to the organization.”

In the research Helen Arnold, CIO of SAP stated IT should not be seen primarily as a cost, but rather as a tool for broader efficiency goals.

“To achieve greater efficiency and bring down cost, a validation and redesign of business processes is often paramount,” Arnold stated. “Typically, it’s a new technology that will enable these benefits to materialize so that the organization achieves higher business value.”

The strategic value of IT is now being recognized, and a closer CFO-CIO relationship is developing as a result. In the rest of this series, we explore how CFOs and CIOs are collaborating across four key activities:

  1. Managing cybersecurity
  2. Creating an analytics-driven organization
  3. Establishing information strategy, architecture and processes
  4. Transitioning to a digital IT function

In an interview with CIO Tech Asia veteran chief financial officer (CFO), Catherine Birkett, CFO of payments unicorn GoCardless, spoke about the changing relationship between the finance team and IT.

Image tag Catherine Birkett CFO GoCardless

A CFO’s perspective

According to Birkett the role of CFOs has been elevated in times of crisis and where the focus is switching to profitability, rather than pure revenue growth. The value of cost control is heightened and therefore engaging with the CFO is much higher up the agenda.

The relationship with the CIO is always close both from the internal system requirements both for finance but also in more general process and control requirements across the business.

“I’m a strong advocate of the finance team having oversight across reporting and understanding integration between systems,” she said. “With the CISO it is important from a control perspective that there is alignment but I also feel sometimes the CFO is a commercial balance to the requirements of the CISO.”

The relationship has definitely become closer as all departments are more dependent on data and the Finance Department has moved from the core focus of accounting to analysis, said Birkett.

“Clearly too as much more work is automated the dependency on systems for control is much greater,” she said.

Working with CIOs

Birkett thinks CIOs “can sometimes be too focused on perfection”, during times when a quick solution is needed.

“Sometimes a solution is needed more quickly and 90 per cent can be the right answer,” she said.

“It is important that the business is able to get answers and sometimes finance will need to find manual workarounds to provide data to management.”

According to Birkett, generally a CFO is a supporter and so long as the dialogue is open and honest more can be achieved by working together.

“CFO generally [are] independent and with a less operational role for day to day so should be seen as an advocate and partner and not an adversary,” she said.

“Both the CIO and CFO have aligned interest over high data quality and controlled systems and processes so working together should be the way forward and the CFO can often be a supporter of investment.”


Getting the relationship right

To understand these commonalities, service organisation Deloitte suggests, CFOs can identify how the CIOs collaborates within the “Four Faces” framework associated with the CFO’s primary roles:

  • Catalyst: What investments is IT making or identifying as critical for future scaling of the business?
  • Strategist: How is technology supporting the organization’s growth strategy?
  • Operator: Is IT delivering timely and accurate data that supports the delivery of predictable outcomes and insights on revenues, costs, market share, profits, and earnings?
  • Steward: How is IT managing security risks and protecting core assets? Is there appropriate governance for technology investments?

According to Deloitte an important area where CFOs and CIOs can collaborate is a common approach to IT investments that looks at strategic risks. These risks “can undermine management’s assumptions” or the organisation’s ability to achieve its strategic goals.

However, a comprehensive IT investment governance framework allows CFOs and CIOs to look at the opportunity of a given investment and the risk implications together, along with other key executives and possibly the board, so that risk governance isn’t a compliance activity after the fact.

An effective governance framework for IT investments typically divides governance among three groups with the following responsibilities:

Business Technology Steering Committee

  • Set vision/direction for technology investments
  • Integrate technology in business strategy
  • Define risk appetite
  • Prioritize investment choices
  • Monitor results and course-correct as appropriate

Operational Governance Council

  • Evaluate/approve business case and project proposals
  • Monitor program and project management activities
  • Oversee execution of projects for timeliness, budget and other requirements and effective implementation
  • Provide/approve resources (people/funding)
  • Monitor risks, capabilities, and benefits

Technical Governing Bodies

  • IT strategy, planning, and budgeting
  • Facilitate IT decisions
  • Govern enterprise architecture
  • Monitor and manage IT procurement
  • Provide quality assurance and regulatory oversight
  • Within this framework, CFOs can focus on establishing and co-facilitating the Business Technology Steering committee with their CIO counterparts and help set the parameters for the operational governance, while technology governance is the sole responsibility of the CIO.


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