Finance and IT departments might share a common desire to do what is best for their company, but they can have competing interests. IT teams want more budget for investment, while finance teams often want to keep a tight leash on expenses. This tension can manifest in poor decision-making that could impact a business’s bottom line.
For instance, the EY 2024 Tax and Finance Operations Survey found that 68% of tax departments are not treated as a key stakeholder by the IT function. While they may be consulted on issues, it is often too late to influence key decisions.
“The relationship between IT and finance can sometimes be adversarial if the teams don’t see themselves as partners,” says Rob Johnson, global head of solutions engineering at IT business SolarWinds.
When the relationship or communication between the CFO and CIO is weak, organisations risk being pulled in multiple conflicting directions, leading to misaligned priorities and potential inefficiencies.
Mark Partin, CFO at software company BlackLine, says that one of the challenges he sees is shadow IT, where employees use unauthorised applications. “When you have that and finance has to operate with a different priority and mission and objectives outside of the IT org, not only are we sub-optimising for the company, we are also only focusing on our own backyard,” he says.
The relationship between IT and finance can sometimes be adversarial if the teams don’t see themselves as partners
This misalignment on priorities means the CFO and CIO functions can often end up in different places where they may not have access to critical data, systems or controls, Partin adds. That could have a significant impact on both productivity and profits.
“A lack of collaboration can lead to ineffective use of technological solutions, slower operations and workplace inefficiencies, ultimately resulting in higher costs and employee morale issues,” says Jeremy Rosall, senior vice president for finance at data management business Iron Mountain.
By contrast, companies that strive for closer alignment between the CFO and CIO functions will see benefits because everybody is on the same page rather than looking at their function in isolation.
“If you strategise with a CIO about the top line – how they are building your infrastructure and managing your data – it can become a competitive differentiator and help the business grow,” says Partin.
The growing importance of data and AI to business performance further underscores the need for deeper ties between the CIO and CFO functions to ensure organisations are getting the most value out of their tech investments.
“There’s an incredible opportunity to transform how you run and strategically guide a company if the CFO organisation is working in partnership with your CIO organisation,” says Brian Montgomery, senior director for international finance at Workday. “To really get what you need out of that data and maximise potential, you need a very close partnership.”
Companies with misaligned IT and finance functions will struggle to use data to strategically transform their business and help senior management make more informed decisions. What’s more, they will also be at a competitive disadvantage to peers that are more closely aligned, Montgomery says.
Those businesses that are more closely aligned will also be more agile.
“A collaborative approach that embraces technological solutions can accelerate innovation, reduce development time and lower costs, making it easier for organisations to adapt to changing business needs,” says Rosall.
Some companies are already strengthening ties between finance and IT to support the wider business strategy. Partin says he has seen a clear shift over the past five years as both the CIO and CFO roles have become more strategically important to their organisations.
“CFO meetings with the CIO are now much more thoughtful, strategic and engaged with the overall company purpose and priority,” says Partin. “Before, CIOs were often in the dark about a lot of things, but now they’re a part of the planning, so there’s a lot more engagement. We’re all now speaking the same language about helping the company grow.”
This is in stark contrast to how IT and finance teams would communicate in the past.
“Finance teams would usually come up with a laundry list of problems and then just lob it over the fence to IT,” says Montgomery. “Now the approach is very different – the CIO and CFO orgs are working hand in hand. They’re in the same meetings, so the CIO org has a much broader and in-depth understanding of the challenges that need to be solved.”
A more collaborative approach from the start also ensures joint ownership of any projects, reducing potential conflicts down the line.
“We’re at the same table and we own our problems together,” says Montgomery.
Developing this mutual understanding is the first step IT and finance teams should take to build closer relationships so both functions are allied when it comes to meeting the company’s long-term goals.
“Transformation sits between the CFO and CIO. If you aren’t in sync, transformation projects have a tendency to take on a life of their own,” says Partin.
CFOs should also make an effort to understand technology, says Partin, something the CIO function can support by creating greater awareness about the opportunities presented by tech investments.
“Sometimes we just take it for granted that everybody understands AI,” says Sumit Johar, CIO at BlackLine. “It’s all about better communication, regularly touching base and explaining the art of the possible to the CFO.”
IT and finance teams also need a mutual understanding of their co-dependency when it comes to the strategic direction of the business.
“Without finance, you can’t fund innovation and operational excellence, and without IT, you can’t deliver innovation or optimise the operations,” says Johnson.
The ideal working relationship between IT and finance is a symbiotic one, where CFOs and CIOs work collaboratively as strategic partners and are fully aligned with the business’s overall goals.
