07 Feb 2023
How a better-aligned CFO and CIO can accelerate the digital transformation of the finance function to both their advantages
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Right now, a lack of alignment is holding back digital transformations and the finance function is no exception, but it needn’t be that way.
We recently reported on the relationship between the CIO and the CFO, and how they had to be mutually supportive on the road to digital transformation.
We described how personal chemistry and mutual respect, and a shared language, is the cornerstone of this united front, especially when persuading the rest of the business.
But what about the CFO’s role when it comes to the digitization of their own finance functions? And how is the relationship with the CIO helping (or heeding) that process right now?
CFO’s top priority for 2023
Well, there’s little argument that transforming the finance function is very much a CFO priority if a recent Gartner Report is to be believed. In their survey of CFOs, 90% ranked their top priority for 2023 as ‘Evaluating finance function strategy, scope and design’.
This was followed by ‘planning and sequencing finance transformation activities’.
So, the ambition is certainly there, and the benefits are clear. Digital finance is business critical. Dagmar-Elena Markworth, Partner at Odgers Berndtson Germany adds: “We are well into the age an age where data-led decisions are the standard and no finance chief can afford to be an outlier to progress.”
But there is a long way to go. In Germany, particularly.
More than a quarter (26%) of finance and IT leaders surveyed in Germany admit that their organization has not yet developed or deployed a digital finance transformation strategy.
These figures, from a WorkDay report on ‘EMEA's Path to Digital Finance Transformation’ show the country in a worse light when compared to EMEA’s average of 16% of CFOs yet to start on the road to a digital transformation strategy.
Interestingly, when examining the benefits of such a transformation, Germans see two clear wins that stand out against their neighbours. They value a digital transformation as providing the ‘tools for training and upskilling finance employees’ and also equipping them with the ‘technology to manage finance employees’ performance’.
Barriers to progress
So, if the ambitions are there and the benefits are understood, what are the barriers to reaping the benefits of a digitally transformed finance function?
Well, for one thing, there is a distinct lack of finance-IT alignment. It’s a top barrier to finance digital transformation across EMEA.
Which brings us back to the importance of the CFO-CIO relationship.
The CFO needs the CIO for very practical reasons: to provide the very latest data from which to extract reports and build solid, insightful foundations for decisions.
However, that might be hampered by a CIO struggling with legacy systems where data is held in different systems and isn’t up to date. The clever CIO will use those drawbacks to their advantage in advocating for investment in new agile new tech that streamlines IT functions and offers better access to data. Exactly what the CFO wants!
Speaking a different language
The lack of CIO/CFO alignment can also be found elsewhere too, in the skills and language that allows them to work together.
On the former, CFOs and aspiring CFO candidates must be technologically literate. That means being comfortable with data, technology, and cross-disciplinary collaboration.
But back in the real world, a survey by FT Longitude revealed another clear picture of how the most basic misalignment between the finance and IT functions plays out in day-to-day business. Critically, 41% of CIOs weren’t even in the room when critical meetings concerning finance were happening.
More than one commentator recommends that the best way to build understanding is not just to go to those meetings, but to have people sitting in the CIO’s team who understand finance and then people within the CFO’s team who understand the importance of data. Day in, and day out.
How often does a team struggle with a perennial problem till the (right) fresh pair of eyes offers a fresh solution?
When you have common knowledge, you can build a shared language between finance and IT, and that can only speed a smoother transformation.
Share at the top too
As we also pointed out in our previous article, it is perhaps not overdue to suggest that the CIO-CFO alignment-building relationship should continue right up to at the boardroom table.
It’s only at the top table where the details and nuances of the business are being discussed that the CIO can understand the CFO’s role, responsibilities and demands. Not to mention gathering valuable insights from the rest of the business.
“With a shared understanding and language, a well-aligned CIO-CFO partnership, together with their teams, can accelerate the power of a data-driven organization”, states Katja Hartert, Partner at Odgers Berndtson Germany.
If you want to discuss these issues and how they affect your talent and leadership planning, or perhaps want advice on your own career trajectory, please get in touch.