Success awaits CIOs and CFOs who reach a level of competence in each other's roles.

Christian Lanng, CEO, Tradeshift

November 20, 2014

4 Min Read

Arguably, it was the prospect of the Y2K bug that first propelled the CIO from a back-office operative to a front-line member of the executive team.

The idea that the business faces catastrophic risk from computing -- the very thing that promises to protect and improve performance -- literally transformed the visibility and expectation of the CIO role forever. It also marked the point at which the relationship between CFO and CIO shifted. Even though they spoke different languages, they became peers -- each now with a seat on the executive management team and equal voice in determining the strategy and successful management of the business.

It's been 15 years since the Y2K bug. So how are these top roles doing? Sure, we've heard the jokes -- CIO stands for Cost Is Outrageous, while CFO stands for Cancelling Funds Officer. Yet these two executives and their functions are now inextricably linked, and their partnership is critical. With global spending on enterprise IT forecast at around $3.8 trillion, CIOs have gained strong insight into the financial considerations and impact of purchases. In the meantime, with data mining and analytics being the "new gold" in fiscal decision making, CFOs are gaining increasing IT expertise. The fact that these executives have had 15 years in partnership and have gained a level of competence in each other's roles is a massive asset as we enter a new era of business change driven by evolving technology infrastructures.

[Five important reasons CIOs need a seat at the negotiating table. Read Why CIOs Should Be More Involved In Acquisitions]

The advent of cloud-based computing, massively scalable machine learning, big data, platform- and software-as-a-service, and the mobile-first enterprise is not simply evolution. It's a revolution. Businesses are redesigning around these new methods of technology delivery. Small businesses can now potentially play on a level playing field with big businesses, because they can simply plug into an outsourced infrastructure that would otherwise cost squillions to create. Because of this, it is a strategic imperative of big businesses to be nimble and evolve. The alternative is to become obsolete and have their lunch eaten by upstarts and disrupters.

To successfully navigate this business transformation, both parties must work together to get the speed of change and the cost of change right. A symbiotic relationship between CFO and CIO has never been more crucial.

The importance of speed of change is top of mind with CIOs. Are they going to rip and replace an entire IT infrastructure to transform? Maybe, but definitely not all at once. Where do they start? How fast can they go? What functions and business units should transform first? What are the interdependencies between functions? What is the potential financial impact of changing, for example, supply chain management infrastructure on cash flow? For a CIO to transform the business at the right speed and at the right stages, they must look to the CFO to help answer these questions. They need to understand how the bucks flow through the business.

The cost of change metric is going to matter a lot to CFOs in the coming years. To understand, prioritize, and accurately plan for investments that will redesign business, they must have deep insight into the critical systems, data flow, and inter-relationship between systems. Understanding these technologies will help identify how, when, and what to invest in change to maximize the ROI timing, so that change itself begins to fund future change. They need to understand how the bytes flow through the business.

In learning to understand and speak each other's language with a reasonable degree of fluency, the CIO and CFO partnership will be able to drive both the speed and the cost of change for a better business and sustainable profits.

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About the Author(s)

Christian Lanng

CEO, Tradeshift

Christian Lanng is CEO, Chairman, and co-founder of Tradeshift, a global-business platform connecting enterprises with their suppliers and simplifying vendor relationships. After his first startup at the age of 19, Christian took a position in the Danish Government where he launched its new strategy to connect with its suppliers in a different way. He is regularly invited to speak at events around the world about how modern business needs to change, and his background studying sociology broadens his perspective beyond technology alone.

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