CIOs and CFOs Should Ally to Drive Business

by Sonal Desai    Mar 19, 2009

Offices of the chief information officer (CIO) and the chief financial officer (CFO) are coming out of their silos to ally and develop key business strategies. However, the development is at a nascent stage and will take some time to pick pace.

According to Jaypal Jain, departmental lecturer in management (accounting) at the Said Business School (University of Oxford), in the general industry, CFOs have not really treated the accounting practice of software as a tangible asset. They have tried to write it off. Because of this huge gap, the two departments have not been able to see eye-to-eye. "Where IT is concerned, it is focused on maintenance and efficiency. However, CFOs are more focused on fair value, TCO, Capex, and RoI. The finance arm chiefly depicts the IT organization as a part of its cash flow, which can also result in pink slips."

But the scenario is different in IT companies. "Here, the IT guys are fixed cost. So the CFO has to talk about their benefits, maintenance, etc. It is a question whether the finance treats IT as a tangible/intangible asset," he said. 

Offering a historical perspective, Jamil Khatri, executive director, head-accounting advisory services at KPMG, said that a CIO normally works in silos. "Now a CFO is getting more aligned with a CIO. Because of the business dynamics, the CIO budget is not independent of what a CFO can give. On the other hand, a CFO has to disclose what the business is doing for the CIO to draft proper IT strategies that will enable business."

In agreement with a recent Gartner observation that CIOs should first make all IT deployments in a CFO’s office, Khatri said this will enable the CFO understand the importance of that particular technology, and its implication across the enterprise, and on overall business. "The Gartner observation is reflective of the current environment, where each technology spend helps evaluation of pay-backs. People focused on technology have to involve the CFO, and the CFO, in turn, has to give objective assessment. At the end of the day, the CFO needs real-time information, and therefore has to reach out to the CIO. He has to express his need more actively, and vice versa."

Said S. Mahalingam, executive director and chief financial officer at TCS, "There is a fair amount of integration between both the offices. In these days of cost control, I want real-time information of what is happening, which is where the CIO plays a vital role. He brings in the architecture and the framework. But there are a lot of discussions between the two offices before the framework is filled and the architecture developed."

The scenario can further change if enterprises develop a balance score card (BSC), wherein the objectives and roles of each organization and person are defined, said Jain of Said Business School. The BSC system requires people from different departments to co-ordinate and evaluate, and therefore the two offices will ally, said he.