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Collaboration between finance and IT

As the age of austerity dawns, the struggle for power between FD and CIO could ebb away

The conflict between finance directors and chief information officers is age old, with much having been written on the apparently intractable problem. A self-help guide on the topic published as the credit crunch was in its infancy, lovingly titled Are CFOs from Mars and CIOs from Venus?, advises both to finally iron out the differences between them. And from the other side of the crunch, two years on, it seems they have made strides – in no small part because of the way the greatest economic crisis in most people’s memories really focused the minds of those with budgets to protect.

What some new research now shows is what this harmonisation means in practice – that often FDs have simply taken over the CIO role and become the primary technology invest­ment decision-maker for their company. We have for some time now been told that the trend is towards “new” CIO roles, increasingly focused on business rather than technology. But equally, FDs are now having to read up on technology and really understand its value as the holder of the IT purse strings.

According to a new survey conducted by the Financial Executives Research Foundation (FEFR) and tech analyst Gartner, more IT departments – some 42 percent – now report directly to the CFO than to the chief executive or any equivalent executive. The study went on to reveal that, in 41 percent of organisations, the senior financial executives (mostly CFOs) viewed themselves as being the main decision-maker for IT investments. And 34 percent of CFOs polled are among the key recommending or sponsoring executives. So in three-quarters of companies, the CFO plays a vital role in determining IT investment. In addition, 20 percent of CFOs have a minor role by providing some input, and in only five percent of cases does the CFO not participate in IT decision-making.

It could just that be we are finally witnessing the victory of the FD over the CIO (if that is the case, we can only hope FDs won’t be trading in their pinstripe suits for T-shirts and open-toed sandals, or developing a fascination with bushy facial hair). What it does mean is that senior finance professionals are being given ever greater control over their strategic IT spending: but with greater power comes greater responsibility.

Taking responsibility for a vital strategic area such as IT offers FDs the perfect opportunity to learn more about how the whole organisation ticks. But FDs must not be tempted to go it alone. FEFR advises that FDs should still view their CIO as a vital authority and partner who can show them how the systems work, how they knit together, what they do for the busi­ness, who is in charge of them, and why they cost what they do. And that can mean the FD understanding what to keep and what to slash – along with where the savings are hiding. Both FD and CIO can win.

However, FEFR and Gartner warn that this performance gain is often not achieved because of poor perceptions of IT, a parochial CFO or CIO perspective, or a failure to invest in the CFO-CIO relationship. CIOs must under­stand the impact CFOs have on technology decisions in their organisations and ensure they provide the CFOs with the appropriate understanding of technology, as well as communicating the business value that can be achieved.

The bottom line is that successful collabor­ation between finance and IT is not simply nice to have, but is a prerequisite for any intelligent organisation. The potential value of technology cannot be credibly disputed. The solutions can ramp up efficiency across organisations and have a profound impact on business performance by delivering more effective control, efficiency and business insight.
It is time to get the Martians and the Venusians together.

To learn more on the FD’s growing role in systems, see Financial Director’s report on the Chief Performance Officer at www.financialdirector.co.uk/2256745

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