Strengthening the CFO-CIO Relationship

The relationship between the CFO (Chief Financial Officer) and CIO (Chief Information Officer) in a company can be a tricky one.  A recent study conducted by Gartner and the Financial Executives Research Foundation reports that 42% of IT staff report directly to the CFO with smaller companies at an even higher percentage of 60%.  While the CFO and CIO are both considered leaders within a business organization, they can often butt heads since the CIO is often asked to justify IT expenditures to the CFO.  According to the survey mentioned above, CFOs approve 26% of all IT spending, while CIOs approve only around 5%.  CIO Magazine reported last year that only 33% of CIOs believe they're seen as a "trusted partner or business peer," and just 31% see themselves viewed as a "valued service provider."  A strained relationship between the CFO and CIO is obviously not optimal in running a business, but there are things that can be done to ease the tension between these two departments.

In an article on CFO.com, Susan Cramm offers three ideas for CFOs to help improve what she terms as the “Schizophrenic CFO – CIO relationship”:

Adopt an enterprise perspective. As a business partner, challenge your people to identify IT-enabled opportunities that deliver benefit beyond the four walls of the finance organization or the company. For example, improving the efficiency of credit processing is good, but doing so while reducing the timeframe to approve and extend credit is even better.

Leverage your financial authority on behalf of IT. As a banker, help your CIO strengthen the relationship between IT investments and IT returns by holding business sponsors accountable for realizing the benefits outlined in their business cases. To do so, ensure that project justifications outline the operational metrics that serve as leading indicators to projected financial benefits.

Increase your IT-smarts. Increase your IT-smarts by reading, studying, attending conferences, participating in research consortiums, and getting hands-on exposure to the technology used in your company and others. If you choose not to get immersed in the IT world, then relinquish your supervisory role and arrange for the CIO to report to the CEO or, at minimum, have the freedom to act as if they do.

Of course, there are things CIOs can do to strengthen their relationships with CFOs.  David Rosenbaum offers a few suggestions for CIOs in his article, CFOs and CIOs: Can We Talk?, as well. 

Create IT Transparency.  CIOs can analyze how IT services are used within a business and report on how and where IT money is being spent.  This gives both the CFO and CIO useful information allowing spending adjustments to be made based on service value.

Consider the Cloud.  Cloud computing can alleviate some of the tension between CFOs and CIOs by shifting the role of IT within a business.  Rosenbaum quotes Hyatt Hotels and Resorts CIO Mike Blake regarding the positive effect cloud computing can have:  "With cloud computing, things are brought down to cost accounting. It's price (p) times quantity (q) equals whatever you're buying. The CFO deals with p times q all the time. Now, the CIO deals with p times q because, in the cloud, quantities are smaller and prices aren't as high. IT used to come up with ideas and run it through the solution delivery lifecycle [build, test, deploy], and it could take years. Now you can drop in an app in less than two minutes. No one's waiting for IT anymore."

The CFO – CIO relationship does not always have to be a contentious one.  Following the ideas above can help support harmonious interaction between two very important, but often opposing, company leaders.