For most companies, the COVID-19 brought about a development in the working relationship between the CFO and the CIO as they come together to lead the digital transformation needed to drive the business.
According to a survey sponsored by Rimini Street, the 2021 CFO Peer Insights: Digital Transformation and IT Spending Priorities, 81% of CFOs in Singapore consider digital transformation as their top priority with 78% indicating that they will only fund digital transformation initiatives with strong returns on investment (ROI).
In choosing these areas of investment, 96% agree that CFOs who are successful with their digital transformation efforts have a great relationship with their CIO counterpart while 82% have improved their relationship with their CIO in 2020.
iTNews Asia speaks to Andrew Seow, Regional GM, Southeast Asia & Greater China, Rimini Street to find out more about how this relationship between the CFO and CIO is important to the digital transformation initiatives of an organisation.
iTNews Asia: Traditionally, CIOs and CFOs have always had differing perspectives. Do the CFOs and CIOs align on these digital transformation initiatives? Why is it important for these parties to work closely together?
Often, CFOs are second-in-command to the CEO and are responsible for setting the business up strategically and drive growth. From a digital transformation standpoint, CIOs are finding themselves increasingly involved in influencing the organisation's investment budget.
Today’s modern CFO’s understanding of technology and its potential for delivering returns is higher than ever. The massive shift to remote work and changing business and customer experience models forced by the pandemic has led CFOs to pay more attention to digital transformation initiatives.
For example, the 2021 CFO Peer Insights show that respondent CFOs expect their CIO counterparts to present technology investment proposals with strong revenue generating initiatives (51%), optimise technology investments (45%), and process improvements and employee efficiency (37%).
Nevertheless, 82% of respondents stated that they have improved CFO-CIO relationships in 2020. With business alignments in place, 78% of CFOs surveyed will fund digital transformation initiatives with strong ROI.
CFOs and CIOs must align their strategies to prioritise projects that will add maximum value to the business. Findings from IDG’s 2020 State of the CIO Executive Summary revealed that the top three focus activities for CIOs are managing security, aligning IT initiatives with business goals and driving business innovation.
iTNews Asia: What factors contribute to the souring relationship between the CFO and CIO, and what can be done to improve this relationship?
IT directors and practitioners with high budgetary freedom may be tempted to spend significant capital on projects that add questionable value to the business. Additional pressure is put on finance leaders when IT departments fail to meet their business growth needs, which in turn leads to significant corporate risk.
- Andrew Seow, Regional GM, Southeast Asia & Greater China, Rimini Street
A key setback in the CFO-CIO relationship is a lack of understanding on the CFO's part when it comes to the value of new technologies and IT operations. CIOs must support business strategy initiatives and new business processes with existing funds or find alternative ways to fund these processes.
CFOs and CIOs will have to work together to stay on course strategically and identify the best IT strategy to not only ensure business continuity but drive transformation as well.
iTNews Asia: Whose opinion should hold more weight when deciding the digital transformation efforts, and why?
Technology is expanding the roles that CFOs and CIOs play in an organisation. Traditionally, CFOs are the cost gatekeepers of the business while CIOs are responsible for ensuring that the business runs smoothly.
CIOs are deftly pivoting to combat the overwhelming business effects of the challenging economic climate and are seen as partners to connect the dots between technology and business decisions. It is crucial for IT and finance departments to collaborate closer to identify a strategic Business-Driven IT Roadmap that would bring the most value to the organisation.
iTNews Asia: How can CFOs and CIOs ensure that their digital transformation efforts would have a strong ROI?
In response to growth and innovation, business priorities are shifting. Facing pressure to adhere to vendor roadmaps or lose critical support, CIOs may be uncertain of the right technologies to invest in preparation to meet business demands.
CFOs and CIOs should collaborate to align the organisation's IT mission with business transformation. A Business-Driven Roadmap – a 3 to 5-year plan to start with – that translates the organisation’s business strategy into technology initiatives, provides a holistic view of the timeline of support needed to deliver and maintain the solutions being planned.
CIOs should work with their CFOs to gain as much transparency as possible on their current cost base and formulate a credible plan to cut costs and maximise ROI.