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The number of C-level job titles in the boardroom seems to be growing more and more each year, with positions like CHRO, CTO and CMO now present in several organisations. However, one C-Suite role has been responsible for an incredible number of business functions over the years: the CFO. With a job role that has covered everything from IT through to HR – not to mention finance – many parts of the business historically saw the CFO as the one leading their team.
This is no longer the case, however. Not only has the increased number of boardroom members allowed the CFO to concentrate solely on the finance function, but the rise of digital has also led to the CIO having strategic importance at a level not seen before in the C-Suite. While many perceive this to be a transition which has recently occurred, it has in fact been a growing shift over the past two decades.
For the financial services sector in particular, frustration with the IT function is not uncommon – delays in projects, insufficient resources and constant restrictions can lead to discernible tension between the CFO and CIO.
A further spoke in the wheel is provided by the frequency with which CIOs are given budgetary freedom. The rise of the ‘vanity project’ phenomenon, where senior IT directors use up capital and resource on highly technical projects with questionable business value, is adding to this already building tension.
As a result, the role of the CFO has become quite challenging. IT departments often fail to make the needs of the finance function a priority, which means that those in the finance department are frequently forced to rely on ineffective, quasi-manual tools such as Excel. Solutions such as these not only add extra pressure from a resource perspective, but also bring significant corporate risk to an organisation.
There are two sides to every story, however. EY’s recent report ‘The CFO Agenda’ highlighted a key flaw in the CFO-CIO relationship, which stems from CFOs’ inefficient understanding of IT issues. As the CFO and CIO need to collaborate to achieve business success, it is clear that a more productive relationship is needed here.
F is for Finance
With modern CFOs now focused almost exclusively on the finance function, it has become clear that, much like the IT department, these executives often have a tense relationship with other areas of the business. As a result, CFOs are seeking to tilt the boardroom back into their favour.
The most effective way to do this is to consider a ‘business partnering’ approach, whereby the CFO provides commercial and economic insights for the business to input into wider strategies. The current political climate, for example, provides a new opportunity for the CFO to provide the board with guidance on the political and economic climate globally, and to help plan, budget and forecast for the potential volatility ahead.
By adopting this approach, CFOs can assist in cooling the tension and diminish any lingering friction between different departments, including IT. With this approach, everyone in the boardroom ends up speaking the same language, with the CFO offering far more strategic guidance to the business.
Not only is this model beneficial for CFOs themselves, but it also shows the value that the entire finance department can add to a company’s planning and forecasting needs. Through increased strategic thinking and a deeper collaboration with the CIO, the CFO can recognise the value of IT as a tool for broader efficiency goals and achieve greater results for the organisation.