Build an effective partnership
There are four steps you can take to build an effective partnership with your CFO.
Step 1. Optimize the supply side of the IT budget
The typical general ledger may be limited to an asset-based view of the world – labor, hardware and software – split between operational and capital expenditure. However, this is the world that the CFO lives in. Do the basics of budgeting, forecasting and contract management well enough to effectively manage IT costs from the CFO's perspective. Build practices that support effective fiscal management and ensure budget accountability throughout IT.
Step 2. Provide visibility to stakeholders
It’s difficult for enterprise stakeholders to understand the value of IT if you only talk about assets, opex and capex. Create a service catalog in client-facing terms such as projects, products and services and give stakeholders a choice where possible to help manage demand. CIOs can use benchmarking to explain the root cause of increases in technology spending. Hint: often the root cause is the demand or volumes, not the rate or cost of the service.
Step 3. Work with the CFO to optimize IT spending
On average, 81% of IT spending is in a CIO's budget, with the remaining 19% split between sanctioned business unit IT spending and unsanctioned spending — or shadow IT. Work with the finance team to build effective governance on all IT spending across the enterprise, while avoiding a command-and-control mentality.
Step 4. Use technology to optimize business costs
Create a joint task force to evaluate and select opportunities, focusing first on traditional IT opportunities and then evaluating new technologies outside of traditional IT. The 2018 Gartner CEO and Senior Business Executive Survey showed that CEOs intend to invest more in technology. CIOs who manage IT supply-side spending, while influencing the enterprise to optimize IT demand-side spending, should be rewarded by the CEO and CFO with additional budget to fund IT innovation projects. The end goal should be to effectively optimize all enterprise costs, both IT and business costs, through the effective use of technology.