Since its inception over the last ten years, the process of digital transformation in a corporate sphere has been slowed somewhat due to the ongoing battle between the IT and finance departments. With CIOs prioritising the strategic value of technological innovation and CFOs often only concentrating on cost discipline alone, the two have historically been at crossed purposes. However, the tide may now be turning.
A recent survey from advisory outfit Grant Thornton LLP found that over two-thirds of executives interviewed planned to increase their company spending on digital initiatives over the coming year. Meanwhile, another report from Ernst & Young found that 61% of CFOs have reported improved collaboration with CIOs over the last three years. The battle is getting easier.
Alignment of the C-Suite
With digital transformation now almost universally recognised as a key method of staying competitive in today’s online marketplace, 69% of CFOs surveyed said that they planned to pour more money into the process over the next 12 months. 40% of that percentage indicated that the increase would constitute greater than 10% of the existing budget. These investments are directed primarily at catching and overtaking rivals.
Meanwhile, the EY study showed positive results in that 61% of CFOs believe their relationship with CIOs has improved over the last three years, with 71% of respondents reporting increased involvement in IT matters. However, almost half of those surveyed (44%) said that a lack of knowledge about technical aspects of IT issues was the main obstacle to facilitating a more productive working relationship with their CIO counterparts.
Working together for a better today and tomorrow
Ultimately, improved collaboration between the two departments is crucial not only to the achievement of short-term targets, but also the long-term success of the business. Traditionally, digital transformation efforts have been focused on modernising and automating businesses processes, which improves operational efficiency, saves both time and money and ultimately enhances the bottom line – something very much desirable for the finance department in both the short and long term.
However, an intuitive understanding between CIOs and CFOs can positively impact companies in a variety of other ways, as well. For one thing, greater investment in AI and machine learning can be diverted towards improving user experience at the customer’s end, thus resulting in reduced churn rates, better sales conversion ratios and a widened customer base as a whole. Over several years, this could result in significantly improved profit margins for the entire business; indeed, according to several case studies from Forbes Insights, the digital transformation brought about by improved CIO-CFO collaboration resulted in sales and profits increases of 7% and over.
Meanwhile, the introduction of new GDPR regulations and the ubiquity of cyber attacks mean that data protection concerns are becoming more and more of a priority for all businesses. With the cyber-criminals of the modern era ever-more organised and strategic in their endeavours, companies must be increasingly cognisant of the dangers at hand and sophisticated in their attempts to repel them. Greater cooperation between CIOs and CFOs can facilitate risk mitigation, shore up cyber defences and protect company assets from malicious attackers.
Quid pro quo
The relationship between CIOs and CFOs can be a mutually beneficial one with substantial rewards for both sides. On the one hand, the IT department is integral in assimilating all available data about the performance of a company and translating it into intelligible evaluations and aims. From these interpretations, CFOs can then assess potential risks and implement plans to move forward, so a comprehensive understanding of the raw data is crucial to a CFO performing their main functions. A CIO can help with this.
On the other hand, CIOs can benefit from the insight provided by a CFO in building a robust business case for planned investments in the IT infrastructure. Increased collaboration between the two can lead to impressive metrics detailing the ROI of any given proposal, meaning it’s far likelier to be given the green light when it matters most. That green light is absolutely essential for any business looking to harness the power of digital transformation to get ahead of the chasing pack.
Digital transformation is here to stay
Adoption of digital transformation is fast becoming the prerequisite for any business serious about staying competitive and achieving success, regardless of industry or sphere. Bringing that transformation to fruition can be a difficult enough process even when all players are pulling in the same direction, but if IT and finance are at loggerheads, it’s all but impossible.
Fortunately, the signs indicate that the battle is reaching its endgame. Make sure your own enterprise isn’t left behind by unifying the interests of your CFO and CIO behind one common goal. Together, they’ll be all the better equipped to making it a reality. Read our 10 Steps To Achieving Business Optimisation for a simple step-by-step guide from Velocity’s CEO to leveraging technology.