The emphasis on the importance of the relationship between the heads of the finance and technology functions is at the root of a new report from Forbes Insights. Conversely, when the relationship is problematic between finance and information technology then digital transformation projects tend to fail.
Insights into this working relationship stem from a study of some 500 CEOs, COOs, CIOs and CFOs, which was conducted by Forbes Insights together with Dell EMC. The bad news is that the current state of play, across the big firms surveyed, isn’t great.
Barriers to digital transformation
The research found 89 percent of senior executives acknowledged that major barriers exist between these pivotal functions. This is juxtaposed by the finding that 96 percent of respondents seeing a close CIO/CFO collaboration as being critical to business success. In other words, it needs to happen but often this isn’t the case in practice.
The types of obstacles getting in the way of a successful digital transformation project include “outdated ideas about the role of CIOs” and “obsolete reporting structures”. Thee barriers prevent the levels of cooperation occurring that are necessary for projects to succeed well.
Many CIOs criticize CFOs for not understanding the required technology; while many CFOs state that CIOs do not understand the financial processes within the organization (a “lack of business expertise”).
The changing role of IT within businesses
One reason for the internal conflict, Finance Monthly states, is because after the Chief Executive Officer, the secondary ‘leader’ of the business has historically been the CFO. The greater focus on IT has shifted this balance.
On the other hand, Technology Advice notes that CIOs are not simply “the IT guys” anymore. They now need to be seen as stakeholders and should input into almost every business decision.
This can also be costly, with the survey indicating that 85 percent of enterprise budgets are typically spent on IT transformation initiatives. The three big areas of spend are set to be: big data analytics; cloud services; and social media.
Successful collaboration key
There are some examples from the survey which do show how a collaboration can work effectively between CIOs and CFOs. Here IT transformation has been effective and in these cases the transformation projects have led to a typical increase for both sales and profits of 7 percent or greater.
The answers to this success are establishing forums and joint projects so these different functions can work together. This needs to be supported by strong communication and visibility of all aspects of the business.
Successful examples include Aviva, where a major cloud computing project took place, leading to gains in efficiency and speed of service; Royal Resorts,. which has used online services to move from a membership only organization to one that now sells travel services to a wider client base; and Panera Bread, which has used digital technology to expand its business from an in-store eatery to providing a take-out and food delivery service.