Earlier this year, I wrote about the CIO-CFO relationship and what it means for business imperatives such as information strategy, data analytics, digital transformation and cybersecurity. The convergence of technology and investment strategies, and the rise in cyber risk, have elevated the importance of the CFO-CIO relationship to a new level.
But, especially in the emerging markets the CIO-CFO relationship is gaining relevance. In early 2015, EY surveyed 652 CFOs from across the world of which 329 were from emerging markets . More than 70% of the CFOs surveyed told us that their involvement with IT has increased over the last three years.
A closer relationship with the CIO and a better understanding of IT through the CIO’s lens of expertise can enable the CFO to understand IT issues better and take more-informed strategic decisions. The CIO can collaborate with the CFO to help drive innovation through IT and manage any risk exposures that new digital technologies might present. CIOs can also help finance leaders to understand how IT can help businesses in realizing efficiency savings.
Hallmarks of a successful CIO–CFO collaboration in emerging markets:
1. Think outside the box: Emerging-market CFOs tend to focus on managing costs and setting budgets. Few take interest in setting the agenda for technology change. CIOs can help CFOs build their knowledge of technology and educate them on the newest trends. In the emerging markets, often unencumbered by legacy systems and processes, technological change can be fast. CIOs can use this to their advantage to introduce newer systems that can leverage analytics across the enterprise, helping to improve working capital and helping businesses to explore the financial implications behind the different choices across channels and marketing platforms.
2. Show them the money: CIOs can help businesses become cost-efficient through the creative use of cloud computing and mobile technology. The use of web-based services can also accelerate the shift of IT models from capital expenditure (capex) to operational expenditure (opex), delivering huge cost savings for the business.
3. Give your CFO the data they need: CIOs must work with CFOs to understand what data they need, and to help ensure reliable and real-time delivery of a wide range of data. Data from social media feeds, for example, can be used by businesses to understand market signals and to analyze their impact on revenue in real-time.
4. Secure your operations: With digital technology transformation comes the inevitable rise in cybersecurity risk. And cybersecurity risk is an enterprise risk management issue rather than solely an IT issue. CFOs who understand this risk can take informed strategic decisions before it is too late. The CIO will be the go-to person with regard to the company‘s cybersecurity strategy, and can help educate the CFO (and others) on the risks.
Emerging market companies and their CFOs face a technology conundrum. Digital transformation of the business is high on their agenda. As the speed of innovation and change continues to increase, IT is becoming more and more important to delivering shareholder growth and, in some digitally disrupted industries, even to staying in business. This means that the CFO should look beyond managing costs and setting budgets, to starting to play more of a role in the company’s digital agenda. And the CIO can help by working closely with the CFO to lead the company’s IT-driven growth in emerging markets.