Chief information officers (CIOs) who can demonstrate clear business acumen and deliver projects with a fast return on investment (ROI) are more likely to make friends in the finance department.
But pre-pandemic organisational structures, where IT was not regarded as strategic enough to have board-level representation, have led to some chief financial officers (CFOs) having a worse relationship with their CIOs.
A study based on a survey of 1,500 CFOs by Dimensional Research, sponsored by Rimini Street, found that CFOs expect their CIO counterparts to present technology investment proposals that demonstrate business value and strong ROI.
The study found that CFOs prefer IT projects that optimise existing investments (44%), generate revenue (40%), and improve process and efficiency (39%). More than two-thirds (67%) say they refuse to waste precious dollars on IT investments that do not “move the needle” for their business, and 70% want to cut spending on non-essential IT investments. More than three-quarters of the CFOs surveyed (77%) said they would fund digital transformation initiatives with strong ROI.
The Rimini Street survey also found that 44% of CFOs want their CIOs to show them projects that optimise existing technology investments. The study found they were also keen on revenue-generating technology initiatives (40%), as well as process improvements and employee efficiency (39%).
More than three-quarters of the CFOs surveyed (77%) improved their relationship with their CIO in 2020, but almost a quarter (23%) admitted that they now have a worse relationship with their CIOs. The main reasons given for the worsening of the relationship with IT was the CIOs’ lack of expertise in key areas (33%), inflexibility (32%) and plans with no demonstrated ROI (31%).
According to the survey report, when it comes to digital transformation and its significance among other corporate priorities, 80% of CFOs globally cite it is in the top-five of their list of priorities, 71% of CFOs surveyed believe that digital transformation investments are key to their company’s success and 77% said they would help the CIO find a way to fund a new digital transformation project if the initiative delivered strong ROI. In addition, 67% of CFOs say they “refuse to waste precious dollars on IT investments that don’t move the needle”.
Thierry Soret, chief financial officer, Usina Coruripe, said: “I am always looking at our technology investments through the lens of ‘will this project move the needle for our business and provide competitive advantage and growth?’
“And the innovation we need will not come from any ERP, but from business-driven applications, as the CFO survey respondents emphasised in the report, I needed a solution that could better optimise what we had and improve operational efficiency.”
For Hari Candadai, vice-president of global product marketing and strategy at Rimini Street, the survey demonstrates why CIOs need to be flexible. In his experience, the CIOs who remained at work during the pandemic were those who were nimble. Those who were too rigidly attached to their pre-Covid-19 IT strategy were more likely to struggle when the business needed to adapt quickly to lockdown measures.
There are numerous surveys showing that the role of the CIO has improved during the pandemic, but in organisations where IT was never really considered strategic enough to be represented at board-level, CIOs may also have felt out of their depth.
Being suddenly asked to make board-level decisions “may be a big leap for a CIO from the back office, who never had a seat at the top table”, said Candadai.