CFOs and CIOs: Can We Talk?

CFOs and CIOs: Can We Talk?

The CFO-CIO relationship is becoming increasingly bumpy. Executives who have worked in both finance and technology offer advice on smoothing things out.

Last summer, a joint survey by Gartner and the Financial Executives Research Foundation found that 42% of IT organizations report directly to the CFO. The percentage soars to 60% at smaller businesses with revenues between $50 million and $250 million.

The same survey pointed out that finance chiefs alone authorize 26% of all IT investments, while chief information officers approve only 5%. This makes sense: in tough economic times finance inevitably asserts itself and casts a gimlet eye on spending. In fact, an October 2011 report by CDW, one of the world’s largest technology resellers, said that only 40% of IT decision-makers expect their budgets to rise this winter, down 8% from last year and the lowest level of IT investment increase since October 2009.

Given the oft-unequal CFO-CIO relationship and constrained IT spending, it’s not surprising that the techies seemed more downcast than usual in another poll, CIO magazine’s 2011 “State of the CIO” survey. Only 33% of CIOs believe they’re seen as a “trusted partner or business peer,” and even fewer (31%) see themselves viewed as a “valued service provider.” Only 11% think IT is providing competitive differentiation — again not a surprise, given how cloud computing is propelling IT toward a utility model.

The fact that two out of three CIOs don’t believe that they’re seen as a trusted partner is not good news for CFOs. That’s because to remain competitive, businesses need their top finance and IT managers to maintain a productive relationship.

At CDW, for example, finance chief Ann Ziegler counts herself fortunate to be “surrounded by experts in technology,” she says. By having “the luxury of working with a CIO who is very financially literate,” Ziegler has improved what she calls her own “fluency in technology.” This is critical, she says, because it allows her to allocate scarce resources more knowledgeably.

Tension between finance and IT can lead to what former Taco Bell CIO and Chevys Mexican Restaurants CFO Susan Cramm has called “the schizophrenic CFO-CIO relationship,” in which “the two parties play an ongoing game of chicken, with CIOs asking for more money and CFOs asking for more justification.” At best, such a relationship is organizationally dysfunctional; at worst, it’s an institutionalized competitive disadvantage.
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