- CIOs and CFOs enjoy strong partnerships at less than a third of companies
- Working with CFOs as partners, not competitors, is key to winning support for digital initiatives
- Gaining CFO support can also free CIOs from the operational constraints of the job
I’ve spent the better part of my two decades in the technology industry helping dozens of chief information officers figure out how to maximize the business benefits of IT. The most successful projects almost always share key attributes, such as careful planning against clear objectives, and an appreciation for the importance of people and process, not just technology.
But before any of that happens, the CIO needs to overcome the keen eye of the CFO. The number of CFOs who say they led digital transformation initiatives has doubled to 28% since 2016, according to a McKinsey report; only CEOs have initiated more projects. Simply put, nothing transformational at scale is likely to occur without this support, nor be celebrated and sustained without a clear financial benefit.
Forging a strong CIO-CFO relationship is easier said than done. At less than a third of companies do CFOs and CIOs enjoy “a strong partnership characterized by mutual understanding,” according to a 2017 study by Deloitte. Historically, these functional chiefs speak a different language, and the CIO’s pet projects are often expensive and take years to complete. That’s not much help to CFOs dealing with quarterly pressures.
The fact that just 14% of CIOs report to the CFO, according to a recent CIO magazine survey, makes them competitors for corporate resources rather than allies. (The trend is toward more CIOs reporting directly to the CEO.)
Make sure to link your initiatives to the problem areas where your C-suite colleagues are underperforming.
So how can you enlist support from the keeper of the corporate purse strings? Here are five lessons to help you win that support. And remember, success is not only key to getting the current project off the ground. It could also break you from the “run the business” constraints many CIOs work under, freeing you to accelerate the value you can bring to your company in the future.
Lesson 1: Understand your role as digital transformation officer
Digital transformations tend to start within the IT department, because IT people are the ones with the expertise to spot, plan, and take advantage of opportunities to apply digital technologies to create business value.
But by definition, these transformations cut across functional organizations and often business units. After all, most of the dysfunction within companies exists at the seams of these silos. Telling your CFO that you can improve the productivity of your IT department or improve the experience for employees seeking help with the printer isn’t likely to capture her imagination.
Showing her how you’ve enlisted support from colleagues to boost productivity or improve employee satisfaction across the company—say, by working with HR, facilities, and legal to revamp the “joiner, mover, and leaver” process of the employee lifecycle—is transformational and can directly impact the top-line financial levers that your CFO, as well as the CEO and board, care about.
Your value message must have depth and breadth. It must inspire and resonate with the IT and operational people who are using your platforms and tools and implementing the process changes. It must also provide the operational payback for functional management: Is HR able to reduce the percentage of regrettable attrition, or is customer service able to improve customer satisfaction while reducing headcount?
But even that isn’t enough. The benefits must roll up to a purely financial metric that can be expressed as a dollar amount large enough to matter for the enterprise as a whole. Does a transformation of the engineering department free up cash to invest in expanding an international sales push?
Lesson 2: Build processes to support your push for influence
Too many C-level executives are used to hearing only operational and budget reviews from their CIO colleagues. CIOs need to change that, and provide transformational reviews as well.
Set up processes so you can track and manage how much of your budget, resources and project portfolio are tied to these initiatives, and to measure your progress. Focus on providing information in a way that lets peers clearly understand how these efforts are impacting them.
This means working to understand how they measure success. Often, it’s a mix of financial and non-financial but quantifiable metrics that differs by function. The head of HR may care about revenue per employee, but also more nebulous factors such as the company’s employee net promoter score.
Be intentional about linking your initiatives to the problem areas where your C-suite colleagues are underperforming—say, by helping them to do more with less or by freeing up labor or resources to assign to growth projects. With this work done, you’ll have the infrastructure in place, you’ll have the initiatives that IT can score by benefit, cost, and risk. Now you have all the requirements to get on the same page with your CFO.
Lesson 3: Hone a high-level narrative
When deciding how to sell the value of your project to your CFO, remember that she will need to be able to sell it to key external constituents, such as the board of directors and Wall Street analysts and investors.
If you believe your project will save thousands of hours of labor, convert that metric into a financial benefit that she can trumpet on a quarterly earnings call—say, savings that can be reinvested in capital or labor resources.
One good place to look for bottom-line impact is on cloud-related spending. According to a survey by Cloudability, nearly 60% of companies spend more than they should on cloud resources—most of them by more than 25%.
In many cases, executives are loath to go after these savings for fear of slowing down innovation or diluting other benefits of moving to the cloud. If you believe software is eating the world and that the cloud is eating IT, the amount of savings in this area will continue to increase.
Lesson 4: Have a robust audit trail
Don’t expect your CFO to green-light your projects based on high-level claims. Most likely, she will be properly skeptical, and will expect you to document the sources of financial benefit in greater detail.
It may well be that she lacks the technical sophistication to substantiate your analysis. But the CFO will likely have the managerial radar to know if others involved in the project lack faith in your claims. To have a strong partnership, your CFO needs to see confident nods from the others in the room during reviews.
Such confidence is the result of a culture of accountability and honesty about the progress of often challenging initiatives. It’s also celebrating successes, in a way that honors all of the teams involved.
If IT has worked well with the finance department on a process transformation, why not have a Go Live party when it is implemented—just as development teams do when they launch a new product. And even more revolutionary, why not follow that up with a Got Value party when you hit a financial target that creates tangible value? Celebrating the financial outcome rather than the technical outcome will transform your brand internally, and hopefully inspire other teams how to pursue and deliver transformational business outcomes.
Lesson 5: Don’t forget to manage down
Don’t give your IT team traditional IT goals and take it upon yourself to translate the results to win over your CFO. Get your team on board from the start, to ensure everyone is working toward those ultimate goals from the start.
As leaders, we are often too quick to assume knowledge or skills gaps on teams require us to translate the ultimate business goals into terms they can relate to. Given the importance of digital transformations, this is a mistake. It is worth the time to enlist your team’s help to figure out how to best measure and communicate the business value of your project to the C-suite. By involving them from the outset, you are far more likely to get the enthusiastic buy-in that will be necessary to hit your objectives down the road.
Be vigilant about not allowing your team to externalize the work—to think that someone else is going to make it successful. Make sure to spend the time so each of your leaders and team members understands exactly how they fit into the bigger picture, organizationally and culturally. With the proper mindset and alignment, you may still find some capability gaps that require training, but far less than you may have assumed.
A few final thoughts: Every business has the core purpose to serve and satisfy customers. While its resources are represented in various budgets—IT, HR, sales, and so on—there is really only one, and it is aligned directly to that purpose.
By applying these five lessons, we’ve seen customers consistently break free from the constraints of the IT budget, and realize more of the business impact, career advances and sense of fulfillment we all covet.
That goes not only for you and your team members, but for all of the people in other parts of the company who benefit as well—including the CFO.