As technology continues to evolve rapidly, ensuring one’s businesses can remain competitive in a digital-first world has stayed at the top of executives’ priority list.
The items on that list, however, need to be consistent throughout the business, meaning key leaders such as the CFO and chief information officer need to be in lockstep — the closer finance and IT leaders are, “the more successful your organization is going to be," when it comes to implementing a successful digital transformation strategy, said Tom Alexander, partner in advisory firm CrossCountry Consulting’s national business transformation practice.
CFOs are increasingly taking point on business’s tech initiatives, but putting such a strategy in place requires expertise from a variety of key business stakeholders, including the CIO, chief procurement officer, chief transformation officer, and the heads of product or finance planning and analysis.
“The good CFOs are bringing all these people to the table and saying ‘Okay, what investments are we making, because we're going to be accountable for talking about return on these investments, to the board, to our investors, investor relations — whatever it is, someone is governing how we are spending this money,” Alexander said in an interview. “And then what is the value creation that's coming from it?”
Breaking communication barriers
An alum of Big Four accounting firm PricewaterhouseCoopers, where he served a 23-year tenure including stints as U.S. controller and CFO for the company’s audit practice, Alexander moved to the McLean, Virginia-based advisory firm in 2021, according to his LinkedIn profile. The company provides finance, accounting and technology consulting services to clients.
The move was partially prompted by a growing interest in helping to drive process improvements, especially through emerging technologies which can enable parts of the business that previously weren’t connected to speak and to collaborate much more efficiently, Alexander said.
For instance, while digital transformation has long been highlighted as a must, moves to execute these initiatives often occur department by department, with one tool bought and utilized for a single team. Not only can this prove costly for a business, but “all of these things don't talk to each other, and therefore they have datasets in them that are not defined the same way,” Alexander said. “And you can't produce insights for your team or run your company.”
Making sure any new digital tools are as interconnected and effective as possible requires transparent communication especially between IT and finance leaders, who need to be in harmony when it comes to areas like software purchases to reduce both spend and technology inefficiencies.
Despite broad-based agreement and studies showing the value of teamwork between CFOs and CIOs, CrossCountry still sees “major silos” with leadership saying, “the data is ours, and you need permission for this,” Alexander said. That request can take precious time to filter down to the necessary parties, erasing any agility businesses have to respond to changing customer or business needs. Almost two-thirds of those surveyed in a recent study by CrossCountry and Forrester stated silos remained between finance and IT; meanwhile, 72% of finance chiefs said their department is siloed, while 61% of IT leaders said the same.
Breaking open those communication barriers is essential for those leading transformation to actually put their strategy into action, with the finance chief emerging as the executive tasked with this responsibility most often.“If you're a CFO, and you're leading business transformation, you're not bringing together your IT leader, or CIO…your chief procurement officer to do the sourcing and your FP&A team, you're probably not telling the right story about how your digital transformation is working,” Alexander said.
Making space for change
A successful digital transformation strategy can do more than just lower costs, but it can also improve the health of a business, according to the Forrester study, bolstering customer experience, business security and adaptability.
Furthermore, bringing in new technology platforms can actually help to solve the IT and finance communication gap “because you're building them together,” Alexander said. As executives adjust to new technologies, however, they also have to be sure to make room for how those tools will shift key parts of the business — including their own roles. Many CFOs are taking on responsibilities that were previously in the purview of executives like a chief operating officer, for example, while other businesses may be melding their IT and finance departments under the eye of one leader.
Both CFOs and CIOs therefore need “to stay agile and realize that their roles can be changing every couple years,” Alexander said.