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11/20/2014
09:06 AM
Christian Lanng
Christian Lanng
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Finding CIO/CFO Common Ground

Success awaits CIOs and CFOs who reach a level of competence in each other's roles.

Arguably, it was the prospect of the Y2K bug that first propelled the CIO from a back-office operative to a front-line member of the executive team.

The idea that the business faces catastrophic risk from computing -- the very thing that promises to protect and improve performance -- literally transformed the visibility and expectation of the CIO role forever. It also marked the point at which the relationship between CFO and CIO shifted. Even though they spoke different languages, they became peers -- each now with a seat on the executive management team and equal voice in determining the strategy and successful management of the business.

It's been 15 years since the Y2K bug. So how are these top roles doing? Sure, we've heard the jokes -- CIO stands for Cost Is Outrageous, while CFO stands for Cancelling Funds Officer. Yet these two executives and their functions are now inextricably linked, and their partnership is critical. With global spending on enterprise IT forecast at around $3.8 trillion, CIOs have gained strong insight into the financial considerations and impact of purchases. In the meantime, with data mining and analytics being the "new gold" in fiscal decision making, CFOs are gaining increasing IT expertise. The fact that these executives have had 15 years in partnership and have gained a level of competence in each other's roles is a massive asset as we enter a new era of business change driven by evolving technology infrastructures.

[Five important reasons CIOs need a seat at the negotiating table. Read Why CIOs Should Be More Involved In Acquisitions]

The advent of cloud-based computing, massively scalable machine learning, big data, platform- and software-as-a-service, and the mobile-first enterprise is not simply evolution. It's a revolution. Businesses are redesigning around these new methods of technology delivery. Small businesses can now potentially play on a level playing field with big businesses, because they can simply plug into an outsourced infrastructure that would otherwise cost squillions to create. Because of this, it is a strategic imperative of big businesses to be nimble and evolve. The alternative is to become obsolete and have their lunch eaten by upstarts and disrupters.

To successfully navigate this business transformation, both parties must work together to get the speed of change and the cost of change right. A symbiotic relationship between CFO and CIO has never been more crucial.

The importance of speed of change is top of mind with CIOs. Are they going to rip and replace an entire IT infrastructure to transform? Maybe, but definitely not all at once. Where do they start? How fast can they go? What functions and business units should transform first? What are the interdependencies between functions? What is the potential financial impact of changing, for example, supply chain management infrastructure on cash flow? For a CIO to transform the business at the right speed and at the right stages, they must look to the CFO to help answer these questions. They need to understand how the bucks flow through the business.

The cost of change metric is going to matter a lot to CFOs in the coming years. To understand, prioritize, and accurately plan for investments that will redesign business, they must have deep insight into the critical systems, data flow, and inter-relationship between systems. Understanding these technologies will help identify how, when, and what to invest in change to maximize the ROI timing, so that change itself begins to fund future change. They need to understand how the bytes flow through the business.

In learning to understand and speak each other's language with a reasonable degree of fluency, the CIO and CFO partnership will be able to drive both the speed and the cost of change for a better business and sustainable profits.

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Christian Lanng is CEO, Chairman, and co-founder of Tradeshift, a global-business platform connecting enterprises with their suppliers and simplifying vendor relationships. After his first startup at the age of 19, Christian took a position in the Danish Government where ... View Full Bio
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nomii
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nomii,
User Rank: Ninja
12/8/2014 | 12:41:11 AM
Re: CFO language
That would be a good organizational hierarchy like having a finance person in IT who would be reporting to CFO. He can support CIO in making budgets and can guide him in cost related matters while planning a project. Secondly he can also help CFO in keeping check on IT expenses.
nasimson
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nasimson,
User Rank: Ninja
11/28/2014 | 10:03:45 AM
Re: CFO language
In our organization, the seventh largest telecom of the world, we have a small team called "Technology Finance" that deals with TCO calculations, capex & opex calculations, investment cases, budgeting, etc.

This is a business partner team reporting to CFO, but sitting, working with relevant tech teams.
nomii
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nomii,
User Rank: Ninja
11/27/2014 | 2:24:46 AM
Re: CFO language
@Laurianne: I think a CIO having a little information on finance would only be helpful to present their case logically in front of CFO and other top management. In my experience CIO used to have a manager finance reporting to him directly who handles these financial matters but again to have a check on it, CIO have to have some basic understanding on the subject.
nomii
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nomii,
User Rank: Ninja
11/27/2014 | 2:15:20 AM
Re: Finding CIO/CFO Common Ground
SunitaTO: I have seen such organization where CIOs are not the member of executive committee. In such structure the main problem is that the organizational strategy and goals are set by the committee who doesn't have a single member who can understand the nitty-gritty of IT to a certain level. After a nonqualified decision is made, CIO is than asked to meet the expectations set by the committee.
anon2454492571
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anon2454492571,
User Rank: Apprentice
11/25/2014 | 10:18:02 AM
Board members play major role in securing organizations information and privacy.
Interesting article, organizations will only develop a risk strategy of the future if they understand how to anticipate cybercrime. I work with McGladrey and there's a whitepaper on our website that was about this very topic that may interest readers of this article. bit.ly/mcgldryinfosec2
SunitaT0
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SunitaT0,
User Rank: Ninja
11/21/2014 | 2:22:51 PM
Re: Finding CIO/CFO Common Ground
CIOs often find CFOs have unrealistic expectations of them and lack awareness of the realities associated with managing and implementing technology at large organizations.

The difficulty of the mission is compounded for CIOs who are not members of their organizations' executive committees, where decisions that affect IT—and, equally important, decisions that IT should influence—are made.

The many challenges shaping CIO-CFO relationships generally fall into four categories: governance, ROI, portfolio management, and communication.
SunitaT0
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SunitaT0,
User Rank: Ninja
11/21/2014 | 2:20:04 PM
Re: CFO language
@SachinEE: I think if there could be better communication channels within a company (and I'm not talking about phones or emails, but actual communication) then such problems wouldn't exist. Some problems for the company turn into a personal enmity between CFO and CIO because such communication channels do not exist. I also think there should be a mediating body that would oversee all board discussions.
SachinEE
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SachinEE,
User Rank: Ninja
11/20/2014 | 10:21:00 PM
Re: CFO language
"As InformationWeek columnist and Asheville, NC CIO Jonathan Feldman often points out, any aspiring IT leader must learn not only the language but also the operations of finance -- or have a short, brutal reign, as he puts it. The CIO tension many people in the tech community are most focused on right now is not with the CFO but the CMO -- or the ever-elusive CDO.But that doesn't absolve IT leaders from working on the CFO relationship."

@laurianne: Every branch is necessary in a business tree. You cannot have marketing maneuvers that lead to investor satisfaction without the CMO. Similarly the CDO is important too.
SachinEE
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SachinEE,
User Rank: Ninja
11/20/2014 | 10:14:59 PM
Re: Finding CIO/CFO Common Ground
"@xerox: Thats an excellent pitch I've read in years. I'll surely put in practice. But wouldnt  that be a bit exaggerating, a little strong to say that "you can't do business without it"."

@xerox: Probably not. It is the duty of the CIO to acknowledge the CFO about the kind of technical aquisitions the company must be having to go the right way (to venture out into the right direction) and to tick all the boxes and at the same time accomplish two things: generate enough cash flow to ensure that assets are created, not destroyed, and the second thing which must be accomplished is getting a fan base with the current acquisition, which may be from the team of the company/technology acquired or from the general masses.
nasimson
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nasimson,
User Rank: Ninja
11/20/2014 | 8:16:31 PM
Re: Finding CIO/CFO Common Ground
> So, if the CFO comes calling for you to explain the monetary benefits of a new technology,
> don't just prove that it will meet his needs - prove why you can't do business without it.

@xerox: Thats an excellent pitch I've read in years. I'll surely put in practice. But wouldnt  that be a bit exaggerating, a little strong to say that "you can't do business without it".

Wouldnt that backfire that "every IT project is related to company survival"
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