5 key areas for CIO / CFO collaboration

5 key areas for CIO / CFO collaboration

There’s now clear evidence of increasing collaboration between the Chief Financial Officer (CFO) and Chief Information Officer (CIO) across a wide range of businesses and government departments.

In many businesses, finance was one of the last bastions of paper-based processing because budget managers were reluctant to get rid of signatures and physical evidence of spending. But the paperless finance function has finally arrived. The business change projects that have delivered this advance have also ensured that the finance and IT functions are far more closely integrated than they previously were. Deloitte has some interesting insights on this.

It’s clear that the collaboration can have a positive effect on the efficiency of both functions, so let’s look at some of the positive effects.

  1. Risk management

The CFO operates in an environment in which audit, assurance and compliance are key watchwords. Therefore the understanding and monitoring of risk is often more developed in the finance function than it is in the IT function. Long-standing measures to prevent fraud and ensure that assets are held safely, have encouraged a culture of risk identification and mitigation in finance departments.

IT departments have usually been very strong on cyber security because that is squarely in their territory. The same goes for information security, from physical protection to safe working practices. But issues such as data protection, where the regime has changed and indeed tightened, over the last few years, have not always been given the prominence they should have had.

Now CFOs are coming to realise the massive financial risk to the company that could result from a security or data breach. And they’re talking urgently to their CIO to make sure that there are no gaps in technology, processes or culture that could leave the organisation vulnerable.

  1. More strategic thinking on IT spending

In the past, the finance function usually interacted with a very small number of systems. One would generally be the corporate behemoth – SAP or Oracle – that held the company finances. That and some MS Excel spread sheets were all that interested the CFO.

The major corporate IT systems were indeed the result of strategic thinking. But elsewhere in the organisation, money was often spent in a disorganised fashion on a plethora of short-term fixes and this year’s IT must-haves.

Now however, technology developments are starting to revolutionise financial decision making and strategic investment plans. For example, a decision to move an entire department to cloud-based working may make it possible to close an expensive building and use the savings to make investments elsewhere. This is a typical case where the CFO and the CIO function must jointly devise and deliver a unified strategy.

  1. Business Continuity becomes a shared concern

Both CFOs and CIOs have become aware of the dangers to business continuity posed by factors over which neither of them have much control.

For example, a major internet outage affecting a cash machine network is a conglomeration of IT and finance risks.

Most CFOs now recognise that although many of the threats to business continuity are IT-based, many of the mitigations are also delivered by the CIO. If buildings are unavailable because of terrorism, hurricanes or lack of transport, the remote working technology that the IT department can deliver comes to the rescue.

  1. More robust internal audit processes

As mentioned above, audits, internal and external, are an ever-present factor in the work of the CFO. Some CFOs have felt that while their departments are under constant scrutiny, other departments such as IT, have far less robust audit processes. This is partly because auditing IT security for instance, requires specialist and expensive auditors.

However management audits are becoming more widely used and these do not seek to ‘score’ a business function. Instead they seek to work with the business to identify areas that could be strengthened. More cooperation between the CFO and the CIO is often recommended as part of the move to improve business processes.

  1. Identifying “big data” opportunities

In corporate IT departments, there’s always a “big thing”. For a while now, it’s been “big data” – a push to make the data held by the organisation yield insights about it customers, finances and strategy. The CFO can work with the CIO to inform these discussions by introducing concepts such as Return on Investment (ROI) which can often help to keep the conversation grounded. Further reading on this.

Further collaboration opportunities

  • Communicating across the corporate silos encourages everyone to have a better understanding of other parts of the business and of priorities across the organisation.
  • Communication is greatly helped if each section drops its jargon and uses plain English.

• Seeking a consultant’s view of collaboration opportunities may yield further insights into possible cooperation.

Category Business