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CIO-CFO battles hinder IT transformation

CIO-CFO battles hinder IT transformation 

The problem appears to be centred on two pivotal players – the chief information officer and the chief financial officer.

“According to the study, collaboration problems are exacerbated by conflicts arising from traditional reporting structures and a lack of new incentives aimed at fostering closer cooperation between CIOs and CFOs,” Gaurav Chand, senior vice-president of marketing, Dell EMC, wrote in a recent blog. “CFOs point to problems stemming from a lack of business expertise among CIOs and the conflicting priorities of the two groups – although they also acknowledge that their own attitudes about the role of CIOs are outdated.”

The Dell EMC and Forbes Insight report is based on a survey of 500 global executives. Thirty per cent are from North American companies, 30 per cent from Asia Pacific, 30 per cent from Europe, the Middle East, and Africa, and 10 per cent from South America. The executives work in a variety of sectors, including energy, healthcare, technology, and education. All are C-suite executives; 40 per cent are CIOs, 40 per cent CFOs and the rest a mix of chief operating officers and chief executive officer.

The study found that as many as 85 per cent of global executives plan to spend a quarter of their organization’s budget on information technology transformation next year.

Nearly all of the respondents (96 per cent) view close collaboration between CIOs and CFOs is critical to business success.

And yet, a majority (89 per cent) of senior executives admitted that significant kept CIOs and CFOs from working together on IT transformation.

This is ironic since organization as doubling down on IT transformation expenditures.

The researchers found that the number of organizations dedicating up to 50 per cent of their budgets to IT Transformation will rise nearly fivefold by 2018 to pursue the following goals:

  • Drive to reduce IT costs (75 per cent of respondents)
  • Be first to market with new products and services (73 per cent)
  • Reallocating funds to strategic business projects (67 per cent)

CIO CFO problems chart

While only 11 per cent of the respondents say they see no significant barriers to the CIO-CFO working relationship, the responses from these two groups also indicated that there is much room for improvement:

Only 36 per cent of CFOs and 38 per cent of CIOs describe their collaboration as “excellent.”

CIOs believe some CFOs have an “outdated” view of the CIO’s role.

“Collaboration is challenged when a CFO sees IT as just a cost center,” according to David Bray, CIO, U.S. Federal Communications Commission and recently named chief ventures officer of the U.S. National Geospatial Intelligence Agency.

Bray, however, admitted that CIOs are also likely not familiar with their organization’s overreaching financial goals.

“Left on their own, CIOs may not know the overarching financial goals of the organization,” he said. “That’s why it’s important to have a CEO, CFO or COO who can clearly outline the business and financial goals of the organization and let the CIO identify the technical options for achieving them through IT Transformation.

For instance, he explained, a “strategy-savvy” CIO frame their proposed business cases.

“For example, by saying ‘This system will get what you want quickly, at this price. While this system will take longer to deliver benefits, but it costs less.’ CIOs should make the case that the speed at which IT organizations move is based on the financial and workforce fuels we are given,” said Bray. “ If either one is reduced, IT and organizational progress can be slowed or require dramatic shifts in how the organization operates to reduce legacy spending.”

The failure to collaborate are exacerbated by other conflicts that stem from traditional reporting structures and a lack of new incentives aimed at fostering closer cooperation between CIOs and CFOs.

CIO CFO barriers

CFO, on the other hand, problems arise due to conflicting priorities and CIOs’ lack of business expertise. But they acknowledge that they have an outdated view of the CIO’s role.

“The finance team becomes a barrier if the discussions are only about the budget and how to run as lean as possible. That’s a losing attitude for IT Transformation,” said Khozema Shipchandler, global CFO of GE Digital. “Conversely, barriers arise when the metrics used by the IT team to define success don’t have a financial underpinning.”

He believes that when both sides agree to “give and take in both areas,” then a more constructive relationship can be achieved.

The study, however, said it was “particularly alarming” that most senior executives may not even be aware that friction between CIOs and CFOs exists in their organizations.

For example, when asked to rate the effectiveness of CIO/CFO collaboration, nearly three-quarters (72 per cent) of CEOs and 63 per cent of COOs consider it excellent.

“Left unaddressed, CFO/CIO frictions may torpedo IT Transformation and business goals,” the report said.

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