The business case for the CFO-CIO bestieship

Digital breakdowns and cyberattacks are getting increasingly costly for companies, and CFOs have to budget for security threats on top of all the other priorities they’re juggling. Finance chiefs and chief information officers are finding their responsibilities overlapping more frequently, and while some have formed strong working relationships to stay ahead of cyber threats and other digital priorities, that’s not yet the norm at most companies, according to a recent survey from Gartner.

“Strong CFO-CIO relationships are 51% more likely to easily find funding for digital initiatives, 39% more likely to keep digital spending in line with the budget plan, and 18% more likely to achieve the intended business outcomes,” according to the accompanying release to the Gartner survey, which polled 183 executives (CFOs and CIOs).

CIOs and CFOs can collaborate on investments to ensure, or couch, that long-term costs due to technological risks are kept at a minimum, according to the survey. The CFO—a role that’s been around since the dawn of corporations—would be wise to work with the CIO—one of the newer C-suite positions—to better understand the use of technology, both firm-wide and within their own teams.

That’s especially true now. “The economy is not growing. We’ve had inflation, [and] now there’s the risk of a recession,” Randeep Rathindran, VP of research at Gartner, told CFO Brew. He said in such turbulent environments, every bit of discretionary spending at a company will come under scrutiny, including digital investments.

“When you’re a company or organization faced with economic headwinds, we’re trying to figure out, ‘Well, how can we actually drive growth and profitability in an environment where the economic conditions are not ideal?’...and the spending on digitalization, not just the finance function, but really digital spending across the company,” Rathindran said.

Rathindran said it’s challenging to get a clear picture in any organization of exactly the amount spent on technology, since it’s usually spread across multiple teams. But, “it’s a large chunk of discretionary spending” on technology, he said. So, Rathindran said CFOs will naturally ask, “What are we getting for it? What are the outcomes? Are we getting higher productivity? Are we able to streamline our costs? Are we generating new revenue streams to be able to show that we can grow in this environment?”

The Gartner study found that CFOs don’t believe CIOs understand the financial impact of their work. One solution: Get other C-suite executives at your company familiar with how much things cost, and teach them how to model potential budget scenarios (is there anything CFOs love more than scenario-planning?)—so the executive making tech decisions is well-informed about the financial impact to the company.

Only about 27% of the companies in the Gartner survey have developed intentional overlap between tech and finance, creating finance IT teams, Rathindran told CFO Brew.  “Collaboration with the IT group is important if you don’t have a finance IT team to be able to start implementing,” he said. If a company has a finance IT team, he added, that group could provide useful input in selecting the right tech for financial planning and analysis (FP&A).

Janet Zelenka has a unique role at medical-waste disposal company Stericycle, serving as both the CFO and the CIO. Zelenka described how the roles intersect and yet fail to understand each other at times to CFO Brew, saying at times she thinks, “Okay, I have this great idea, but I don’t know how to monetize it,” and can then promptly switch skill sets, while also having access to company information on how to explain how the technology would be worth the investment.

“You have to maintain and protect the business…because if it gets aged, you introduce risk-score disruptions, and cyber, because older technology is less protected from the bad guys,” Zelenka told CFO Brew.

“You need to invest in IT-developing capabilities to advance the business forward…Everything is IT-enabled these days, from the apps on your phone to your website to be able to access subscribers,” Zelenka said. “It’s about investment for the future.”

The key is connecting the investment to business value—for finance, that could be the value of using machine learning to improve forecasting accuracy, for example, Rathindran said.

That’s not to say that IT budgets are necessarily getting slashed; the expectation is that the IT budgets for 2023 will increase by a little over 5%, Rathindran told CFO Brew. And, while that may be a smaller increase than the previous year, technology budgets are here to stay. —KT