5 IT and finance leaders discuss what it’ll take to make their partnerships bear fruit. Never has the relationship between the CIO and CFO been more critical to business success. While everyone seemingly understands that technology can drive business transformation, not everyone knows how to make that happen.
As the ultimate budget holder, the CFO plays a huge part in this equation, but preconceived notions on both sides often hinder effective communication between offices. To gather thoughts on how best to improve the relationship, HP is holding a roundtable series across the United States. We caught up with several attendees of one such event in San Francisco recently, including:
- Paul Chapman, CIO, HP Software
- Franco N. Palomba, corporate SVP, finance and treasurer, Varian Medical Systems
- Sameer Khera, VP IT, Symantec
- Léo Murgel, VP program and enablement management, Salesforce.com
- Kris Krishan, VP, enterprise applications, Genesys
From your experience, what one word best describes the typical CIO/CFO interaction at many companies?
Chapman, HP: I think it needs to be symbiotic.
Palomba, Varian: Wary. CFOs are wary about how much anything proposed is going to cost and if the ROI is real or believable.
Khera, Symantec: Precarious. It depends if you’re on budget or not.
Murgel, Salesforce: Collaborative.
Krishan, Genesys: Transformation.
What’s the biggest hurdle CIOs need to overcome to improve their relationship with CFOs?
Chapman, HP: There’s a presumption that relationships aren’t good, but in most cases this isn’t true. I think the relationship has to evolve. As we evolve to the new style of IT, we have to evolve to a new style of finance to work with IT. You can’t have one part of the relationship try to evolve without the other. When organizations grow, you can’t have one department left behind.
Palomba, Varian: Delivering true measurable value to the organization and the CFO’s team.
Khera, Symantec: To be able to show the value of the IT spend in a way that the CFO organization can easily comprehend. IT investments also never bear fruit immediately. It typically takes several quarters, if not years, but CFOs tend to manage by quarters and demand changes in spend, which can be disruptive for IT given the long-term nature of projects. This can cause dynamics that can result in friction between CFOs and CIOs. In order to overcome this, CIOs have to be very crisp in their long-term plans and show clear and unambiguous ROI for IT spend. Thirdly, CAPEX vs. OPEX.
Murgel, Salesforce: Ensure alignment around the company’s business objectives (growth, margin, etc.), and CIOs describe their strategies as they support those pillars.
Krishan, Genesys: Communication. Translating IT/technology into business language. Running IT like a business, and the perception of IT as an overhead organization.
Why is the CIO/CFO relationship so critical today?
Chapman, HP: IT is too often on the hook for presenting a technology investment on behalf of the business, which is why budgets need to go out into the business. IT needs to be the creator or major contributor to the value of the investment. This is why value management offices (VMOs) are so important with HP’s CIO/CFO roundtables. The value of an IT investment shouldn’t come from the CIO, unless it’s a pure technology investment. If IT is an enabler, IT should not be responsible for driving the business investment with the CFO. We have the new style of IT. We need a new style of finance. We need a new style of HR. We’ll never be successful for the new style of IT if we’re surrounded by the old style of IT and an old style of finance.
Palomba, Varian: At today’s fast pace of business competition, insightful information needs to be the output of an ERP system—quick and timely. CIOs are generally not equipped to deliver this. CFOs struggle with explaining this concept to a non–finance person.
Khera, Symantec: In most companies, there is some form of transformation going on, as most businesses are changing their business models to accommodate cloud, social, mobile, divestitures, etc. For company transformations, IT is always in the middle of everything and typically requires significant budgets in order to modernize and transform itself. A very strong trust relationship is required between CIO and CFO in order to drive change, which can be expensive.
Murgel, Salesforce: Most often, the attainment of the financial results sought by the CFO requires technology work that’s not necessarily in support of the CFO function, but for other functions (sales, product, marketing, etc.) to deliver on those objectives.
Krishan, Genesys: It’s one of the levers for the CFO to manage the budget, as IT has a big operating expenditure. To transform the company, the CFO needs to leverage the power of the CIO/IT to meet long-term growth.
What specific piece of advice would you offer a colleague to improve communication and productivity between CIOs and CFOs?
Chapman, HP: Start with identifying what is considered an IT investment and what is considered a technology enabler. The business has a set of goals and objectives it’s trying to drive toward. Those shouldn’t be IT investments, those are business investments. Technology may just be a part of it. Sit down and identify what’s considered business-led, IT-enabled, and what’s considered IT-led, IT-enabled. Work with business leaders to make the business case. It shouldn’t come from an IT budget. We have to start decentralizing the IT budget. Centralize horizontal services and decentralize verticals.
Palomba, Varian: CFOs need to put strong financial people on the CIO’s team, and CFOs need to have at least one good systems person on the finance team to regularly review goals and objectives—as well as when each new project is proposed. This way, everyone knows what success at completion will look like. Often, no one really knows what success is or should be. Lack of clarity on the front end of projects generally means you will end up with hash, rather than scrambled eggs, in the end—with lots of unhappy folks.
Khera, Symantec: Communication, communication, communication. And show the value of IT spend and a clear ROI to the CFO organization.
Murgel, Salesforce: Align those financial objectives and highlight how IT works with other functions to support those financial objectives. Technology is an agent to enable the enterprise to meet its financial objectives.
Krishan, Genesys: Most critical is the CFO’s trust and investment in the CIO/IT. The CIO must continue to demonstrate business value, align CIO goals with the company’s strategic goals, transform IT into a service organization, and track cost savings, which is important to the CFO.
For more insights from HP Software CIO Paul Chapman, watch his video discussion on IT as a differentiator with HP Enterprise Group CIO Ralph Loura.