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Are CFOs from Mars and CIOs from Venus?

PwC Finds Large Perception Gaps between Finance and IT Functions in Companies and Recommends How to Bridge Them

Chief Financial Officers (CFOs) and Chief Information Officers (CIOs) in many companies face a large perception and perspective gap – almost as if they were from different planets, finds research conducted by CFO Europe Research Services, a unit of CFO Publishing and part of the Economist Group, together with PricewaterhouseCoopers. The report, based on an online survey and in-depth interviews with more than 130 CFOs and CIOs from all across Europe, finds that while CFOs and CIOs generally express high mutual regard for each other, CFOs believe that IT lacks understanding of their company’s business strategy and financial reality, while CIOs say that finance fails to communicate goals effectively.

The research suggests that CIOs have a higher opinion of their CFOs than vice versa: when asked about their leadership skills, the ability to collaborate and long-term strategic thinking and planning, six in ten CIOs rate their CFOs as “excellent”, while only three in ten CFOs say the same about their CIOs.

However, collaboration between their departments is crucial for the success of their projects and their subsequent impact on earnings. Today, when a company’s success, even its viability, depends on the integrity of its financial data and timeliness of transmission, CFOs and CIOs must make sure they communicate regularly, resolve their natural differences in a rational manner and regularly review the process to ensure that it is working.

Jiří Halouzka, Partner in Performance Improvement, PricewaterhouseCoopers Czech Republic, says:

“CFOs and CIOs tend to see the world through different lenses. However, if they come to a mutual understanding, their differences can be leveraged to achieve better business performance. It is important that CFOs and CIOs develop a shared platform to discuss and agree how to work together. Although each of their areas is highly specialised and complex, it is crucial that they find a common language, without swamping each other with excessive details.”

Knowledge and experience sharing is important. One of the research participants, for example, implemented regular job rotations, moving promising IT managers into the business section for a period of time and giving people from the business side a chance to work in the IT department. Other companies emphasised the need for more business education for IT leaders as a way to bridge the gap between the functions and achieve better understanding.

“The relationship between finance and IT will always be to some extent a ’love-hate’ one. However, our experience shows that both parties have to walk some way towards each other. In organisations where this relationship works best, CIOs typically have a very good awareness and understanding of the business as well as financial consequences, in other words their efforts to understand the other side are greater,” explains Jiří Halouzka.

IT also needs to have a voice at the highest level of the company, regardless of whether it means that the CIO reports directly to the board or to the CFO – what is crucial is that the IT function’s role and contribution is understood and that it is able to align itself to achieving strategic goals and driving value.

By nature, CFOs and CIOs often compete for attention, resources and authority, but the success of their projects – and the company’s overall performance – is dependant on their ability to co operate.

Jiří Halouzka comments:

“Typically, IT aims for a perfect technological solution: a future-proof, robust solution that complies with all current standards, while finance must balance perfect solutions with financial reality – which often translates to the fastest possible delivery at the lowest possible cost. Our research stressed the need for more communication between the two, including joint sign-off at the outset of projects, which leads to a higher degree of accountability and ultimately more effective solutions.”

A final important step of successful collaboration between finance and IT is measuring of progress: establishing new metrics that will show how technology can drive productivity in other parts of the business and demonstrate the returns on IT investment.