- Innovation & Technology |
- 18 March 2017
What the CEO needs to know about the CFO’s pivotal role in IT strategy
CEOs need to understand how the CFO role is changing, to accommodate both finance and IT strategy in the era of digital transformation
Change is a constant for most business professionals and the pace and volume of change is unlikely to ever diminish, particularly with the growth of transformative digital technologies. This has a strong impact on the structure of the C-suite. CEOs must understand the changing roles of their team to develop the most appropriate strategic vision and plan for implementation across the organisation.
The role of the CFO, for example, is now intrinsically linked with the IT strategy of the company. With the Internet of Things (IoT) now an intrinsic part of the IT landscape, the intensity of technological change has increased, and is influencing an organisations’ ability to compete in a rapidly-evolving business environment. To keep pace with this change the CFOs role has augmented, and now extends to technological decisions as they determine the who, what, where, when and why of IT strategy and execution.
Due to the expansion of available IT options and the problems caused by the introduction of shadow IT into the organisational infrastructure mix, the CFO brings a different set of eyes to the situation, which is what’s required to make truly wise strategic business decisions.
No longer just a numbers game
Beyond business applications and number crunching, CFOs now need to understand the changing world of IT infrastructure and outsourcing. The more CFOs know about things like cloud computing, and the greater their understanding about hosting options, the more they can influence IT decisions and help the CIO avoid the nightmare scenario of widespread wastage and a complete lack of integration.
To meet the demands of this new dynamic, CFOs must possess knowledge that goes beyond assessing the costs of IT decisions. They must be fully across the current IT climate to help steer the ship in the right direction.
There are a few specific elements that CFOs need to consider when making business decisions about IT investments.
The importance of close ties to the CIO and CTO
Being across all aspects of IT can be overwhelming for one individual, so it is imperative that CFOs have a strong relationship with the person responsible for the details, such as the CIO or CTO, to make more informed decisions. A close relationship yields a much better chance of the IT strategy being sound strategically, financially and practically.
Understanding the true cost of IT
Preserving capital is critical to the ongoing viability of any company and is the CFO’s responsibility. Previously, CFOs may not have clearly understood the value of IT investments, but now this simply won’t do. Decisions cannot be made purely on the lowest price point at tender; CFOs need to understand which solution will deliver what the business needs most effectively in the longer term.
IT breaches can cost businesses considerably, not just financially but also in reputational damage. Working with larger vendors with the knowledge and resources to provide superior security levels is often worth the additional investment. CFOs need to bear this in mind when weighing up the true cost of protecting assets versus short-term savings.
CFOs need to be abreast of compliance requirements, which is made more challenging by constant changes in compliance legislation. Finding a provider that can ensure compliance is therefore an important factor to consider in any IT decision-making process.
Business must be flexible to remain competitive and retain valued staff. Spending needs to be assigned to infrastructure on an as-needed basis, rather than sticking to set budget cycles. Businesses that can’t act on critical technology needs could suffer significant efficiency and effectiveness shortcomings, so CFOs need to be able to prioritise funds when necessary.
With technology driving most businesses into the future, CFOs must be across all of these things or risk making poor decisions for their company, and indeed, their own future career. CEOs have an integral role to play in supporting the changing roles of the C-suite, including the increased connectedness of the CFO, CIO, and CTO to drive the business strategy.