The CFO and CIO: a vital partnership for success From cost management to strategic IT investment Five CFO-CIO relationship success factors The relationship between the CFO and the CIO has always had a strong cost For those looking to ensure a healthy future for this finance-IT union, there dynamic. Investments have typically involved large-scale purchases of data are five key success factors: storage, enterprise applications and PCs. IT spending as a percentage of revenue, as high as 6% in some industries, 1. Take joint responsibility for driving innovation through digital IT used to be a crucial metric. The goal was to bring this figure down, and CFOs Many sectors are undergoing digital disruption. Innovators and new entrants played a critical role in managing IT project overruns and keeping a watchful are devising new and better processes, products and business models that eye on hidden costs. This is why many CIOs reported to the CFO. force their competitors to keep up or fail. Today, however, technologies are crucial to both operational excellence and Entire business models are at risk. To avoid being overtaken by nimble profitable growth. Tony Klimas, Global Finance Performance Improvement technology companies, businesses must carefully consider two questions: Advisory Leader, EY, believes that CFOs are recognizing the growing strategic • How can IT add value to the organization? importance of IT. • Where should IT resources be allocated? “CFOs are becoming much more aware of the strategic value of IT and what it has to offer,” he says. “There is a growing focus not only on what IT costs, but “Digitization brings finance and IT together,” says Arnold. “IT is now much also on the value it brings to the organization.” more of an innovation driver, enabling new business models. Partnering with the CFO in this context is essential. There should be joint accountability for Helen Arnold, CIO of SAP, agrees that IT should not be seen primarily as a driving projects to the desired result.” cost, but rather as a tool for broader efficiency goals. Christian Gosch, CIO at Erste Group Bank, believes that organizations need to “To achieve greater efficiency and bring down cost, a validation and redesign have a separate, venture-style investment approach to nurture tomorrow’s of business processes is often paramount,” she says. “Typically, it’s a technology innovations. “Some investments don’t bring immediate yield new technology that will enable these benefits to materialize so that the in terms of global revenue. We reserve a portion of global IT spend that is organization achieves higher business value.” focused on the innovation topic. The investment approach is of an investor Venkat Padmanabhan, President and Global Head of Finance — Products, who is ready to take risks. It’s a small group of people who decide what Olam International, believes greater CFO involvement is a key to driving value. initiatives should be given a chance to be developed to a level where we can see the results. We use this ‘green-housing’ approach to ensure that small but “IT is very powerful, and finance should have more ownership,” Padmanabhan innovative ideas are developed to a level where they have a chance. We work says. “What I often see in the outside world is that IT operates in isolation and with the CFO to provide some shelter for these small plants,” says Gosch. has its own priorities. When finance is the core owner of IT, it makes a huge difference when it comes to extracting the full value of IT investments.” As organizations look to drive innovation through technology, this critical CFO- CIO relationship requires a different mindset and better mutual understanding. Partnering for performance Part 3: the CFO and the CIO 7