Can you feel it? The friction between the CIO and CFO is almost palpable.
Just a year ago, CIO magazine’s 2011 State of the CIO report revealed that only one-third of CIOs feel they are seen as a “trusted partner or business peer.” And yet, it’s hard to imagine that percentage has improved over the past year.
Blame the volatile economy, shrinking budgets or other pressures organizations face now that IT permeates virtually all business functions. However you want to assign fault, one thing is crystal clear: CIOs and CFOs need to get on the same page – and fast.
Why? David Rosenbaum sums it up nicely in his article at CFO Magazine:. “...to remain competitive, businesses need their top finance and IT managers to maintain a productive relationship,” he writes.
The benefits to maintaining a productive CIO-CFO relationship are becoming all too apparent. There's more pressure than ever for CFOs to slash fixed costs. And yet, businesses understand that they need to invest in IT to remain competitive. When the CIO and the CFO are speaking the same language, they can change both the dynamic and dialogue to spark a more collaborative relationship.
The first step in building a productive CIO-CFO partnership is to identify and establish cross-functional metrics that are meaningful to both to the CIO and CFO. Rosenbaum goes on to quote Mike Blake, the CIO of Hyatt, "“The CFO said, ‘You know, Mike, we spend a little less than $800 million a year on IT, and you know what? I don’t really have a good understanding of what we’re spending it on, and our business lines don’t believe they’re paying the right amount. Can you fix it?’”
And therein lies the rub. When the CIO is unable to articulate what it costs to deliver a particular service to the business, the dynamic between the two becomes instantly fraught with distrust. This is precisely why we're seeing more CIOs become more analytics-driven and business-focused. They must embrace a new set of metrics to communicate with not only the CFO, but with other business partners, as well. That means CIOs need to better understand -- and then prove -- the cost and quality of IT services, service-line and per-customer ‘profit and loss’ statements, the demand for IT services along with utilization rates and capacities, and vendor performance to rationalize the selection of IT suppliers and enable fact-based negotiations with those providers.
As Rosenbaum concludes, “Companies need to be able to do both: identify the next opportunity while determining the appropriate level of investment based on the organization’s current condition. But they can’t do both optimally unless the CFO and CIO are able to talk.”