Review of Report on CIO/CFO Alignment

Review of Report on CIO/CFO Alignment

I just read an interesting report released by CFO Research Services & Search CIO; Study sponsored by Cisco; Released March 2012)

Although the report somewhat states the obvious, it does include some interesting statistics from the 600+ respondents, and is worth the read and digestion if you have the time.

Here is my breakdown…

Overview

  • Seeks to understand how aligned CIO/CFOs are when it comes to selecting technology that supports their business strategy.
  • Covers areas that they agree and work together well, areas they disagree and need work, and some ideas for making progress.

Gist of the study

  • Although it is recognized that technology has become a core component of the success of many facets of businesses, the pace of its evolution makes it challenging to use that technology, and to communicate the benefits and impact of it.
  • In order to harness today’s technology businesses must move from siloed technology to ‘business technology’.
  • In order to do so IT (CIO) and Finance (CFO) must understand and support each other in order to ensure that they align themselves with the business strategy
  • Challenges to this include a lack of understanding of each other’s priorities/goals as they relate to the business goals, lack of communication and understanding of the benefits and drivers of technology selection
  • Solution to this is having CIO understand CFO and vice versa; having CIO think more strategically; having CFO have a better understanding of the growth potential and long term benefits that new technologies offer

The study does a great job of pointing out the challenges that are faced by both the CIO and CFO. But it is definitely written from the IT perspective. I say this because I see quite a few suggestions that seem to benefit the CIO but not many that benefit the CFO. Lastly, the summary by the sponsor concludes with recommendations for the CIO in working with the CFO – not the other way around.

Here are a few take-aways

  • Challenge
    When the ROI and business cases are not portrayed clearly, IT risks being seen as a cost center. On the other hand, if finance insists on receiving the ROI, it risks hampering its ability to deliver long term benefits that may be hard to measure initially.
  • Response
    Since technology has assumed such a central role in industry, it has required both the CIO and CFO to change their perspectives – with the CIO adopting a more strategic view on technology’s impact business performance, while the CFO has to recognize the overall affect technology has on areas like the customer experience and growth.
  • What CIO/CFOs agree on – Priorities in the following categories when it comes to selecting technology (See Study for details)
    • Business Impact
    • Ease of Implementation
    • Ongoing Cost
  • What they disagree on
    • Who has the most influence on technology acquisition?
    • Who has the power to buy?
  • Opportunity for growth
    • CIOs could engage CFOs earlier in the process so that they understand the business area that is driving the acquisition
    • CFOs could help the process by keeping business units focused on the business need VS. the want
  • Challenge in perception
    • CFOs feel that the metrics used to assess technology investments are clear and demand not just demonstrable ROI but improved KPIs as well
    • CIOs feel that those metrics are not as clear, have issue with CFOs “rigid definition” of ROI, and feel that a good percentage of CFOs have a poor understanding of “how technology supports business strategy and generates value”.

Report’s Conclusion

Although differences in view point, do present a challenge for those that are looking towards the goal of “integrated business technology”, an understanding one another’s priorities and the metrics that guide technology investments do make it possible.

You can read the entire report via the following URL

http://www.cfo.com/whitepapers/index.cfm/displaywhitepaper/14629514

 

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