The relationship of the chief financial officer and the chief information officer in an organization is critical to its success. Both the CFO and CIO must be in sync on best practices and processes and keep clear lines of communication open. Each has a distinct role, complementary to the other. Most importantly, they share the responsibility of investing in value propositions for the organization.
“The company’s vision and goals should be the shared focus that keeps the CIO and the CFO on the same page,” says Bill Dvorak, CFO with CIMCO Communications. “If they’re working toward the same end, results will come easier.”
Smart Business learned more from Dvorak about how the CFO and CIO can work together to improve their organization’s processes and outcomes.
How has the role of the CIO changed over the years?
Historically, the CIO has reported directly to the CFO. However, the role of CIO has evolved strategically to support high-impact functions within the organization. From my experience in large companies, IT now reports to the area that has the biggest impact to the company. For example, IT might have a very strong reporting relationship to product development if the company decides that the product group’s needs are going to be a driver of key business results and therefore the IT resources. In a different organization, that relationship might be the operations, sales or customer service departments, but it depends on the company’s focus.
What should the relationship between the CIO and CFO entail?
The balance between the CIO and the CFO comes from defining the value proposition for the money that’s being requested by a particular department. For example, if the operations group feels it needs IT resources, the CFO’s and CIO’s roles are to ensure that the organization is obtaining the full value from that expenditure. At times, the CFO can be seen as not wanting to spend the money, when in reality it is a decision based on the value that investment will bring to the company. More enlightened CFOs want to get the biggest bang for their buck. The CIO should definitely share this conviction. Most of the time, projects are evaluated through a return on investment model. However, it can be a little more esoteric — it could be something that’s going to give value in terms of perception in the marketplace or customer recognition. These are tougher to quantify and can require more work to ensure that you can still measure the value it brings to a company.
How can the different departments best communicate?
Consistency of process and procedure is a good way to cement a solid working relationship between departments. Repetitious, well-thought-out processes take the stress out of departmental inter-workings and can improve communication between them. Benchmarked business processes are far superior to letting individuals create their own work-arounds, which can be time-consuming and costly. Both IT and finance should provide support and structure to these processes.
To support these processes, IT has a functional responsibility for understanding the business needs of the user group. IT should not just write down instructions and think that will accomplish the job. Conversely, the operational areas need to think through and be very clear about what the necessary requirements are to achieve the desired end result. To propose high-level ideas and provide no details behind what needs to be accomplished can be very counterproductive.
How can the CIO and CFO effect change in their organization?
The key for good interdepartmental relationships is shared vision, shared goals and clear communication throughout the entire organization — which is a very important responsibility of upper management. If you expect people with cross-functional responsibilities such as IT and finance to work as a team, the things you do as an organization have to promote teamwork. If you say you’re a team and you don’t reward as a team or you don’t manage in a way that promotes teamwork, you won’t get team-work, no matter how much you talk about it.
BILL DVORAK is the Chief Financial Officer of CIMCO Communications. Reach him at (630) 691-8080 or [email protected].