Is Your Digital vs. Dollars Battle Torpedoing Your Growth?
Why CFO and CIO collaboration is critical to achieving digital transformation outcomes.
IT-business alignment is the aim, the outcome and the holy grail of digital transformation initiatives in businesses the world over. A few years into business’ collective digital transformation journey, we are starting to see some clear converts – organisations that are strategically adjusting, realigning and intensifying their push forward with digital transformation and are in it for the long haul. And on the other hand there are the obvious dabblers – digital transformation tire-kickers – more apparent as time goes on by their messy roll-outs, IT disaster stories and flat-out fails; those that jump into highly targeted initiatives purely on the back of market peer pressure or simply as a way to cut costs fast.
Successful company-wide digital transformation efforts are intrinsically linked to this concept of IT-business alignment. And at the heart of this is the notion of releasing IT from the constraints of being perceived merely as a “cost-centre” that reports solely to finance, and encouraging its integration and alignment across all the strategic and line-of-business arms of the organisation.
Whilst the converts, having perhaps earned some initial wins, are more likely to accept the slow-burn of the digital transformation pay-off, the dabblers are quick to dismiss digital transformation as a failure, a cost-blow out, not generating ROI, or simply something for the too-hard basket.
Why are the converts having a different digital transformation journeys to the dabblers? Why are some organizations able to walk the walk towards digital success, while others talk the talk but then slow to a crawl?
The core problem is …
Where the converts and the dabblers differ is that they interpret this “cost centre” message in different ways. Changing the perception of IT as a cost centre does NOT mean you don’t need to thinking about cost-effective, scalable and sustainable outcomes for IT investment. It just means that the conversation needs to be broader, longer term, involve stakeholders across the whole business and focus on much more than just achieving cost savings in the short term.
After all – no one is in the business of investing in things that will ultimately cost more and make us less money, right? Most assuredly, questions around the cost trade-offs of digital transformation efforts plague the converts just as much as the dabblers.
Meanwhile the stats tell us…
In a recent Forbes Insights survey of digital transformation “leaders” (organisations that saw at least a 7% increase in sales and profits over the last year) – the converts – are highly likely to view transformation as a strategic priority that supports overall business goals. The responses indicate that successful collaboration between the technology leads (CIOs) and financial decision makers (CFOs) brings together the dual layer financial and technical skills necessary for IT transformation, which then becomes a competitive differentiater itself for the business.
So what stops the digital and the dollars teams from getting on the same page? Well the top reasons, as expressed by the transformation “laggards” (which would include our so-called dabblers…) canvassed in the same survey were the CIO’s lack of business expertise, confusion arising over traditional reporting structures (here’s IT sitting under finance again), lack of real incentive to work more closely together, and CFOs having wholly outdated attitudes about the role of the CIO.
“The finance team becomes a barrier if the discussions are only about the budget and how to run as lean as possible. That’s a losing attitude for IT Transformation. Conversely, barriers arise when the metrics used by the IT team to define success don’t have a financial underpinning. But once both sides can agree to give and take in both areas, they can develop a much more constructive relationship and ongoing dialogue.” KHOZEMA SHIPCHANDLER, GLOBAL CFO, GE DIGITAL
Still not convinced?
So what happens when the CIO and CFO are not working successfully together? Here’s what businesses in the same survey have reported as the most critical outcomes of a flawed CIO/CFO relationship.
- The risk of falling behind competitors increases
- Decisions about technology investments are not as timely or as accurate as possible
- The business struggles to scale as business demands change
- The business is slow to capitalise of technology innovation
- The business can’t roll out new products and services fast enough to satisfy current business demands
- The business can’t effectively integrate newly acquired customers and business
Getting out ahead of the competition, making agile technology and business decisions and investments, leveraging innovation, getting fast-to-market, and servicing customers better…
Aren’t these the very aims and hallmarks of the successful digital transformation journey?
There can be no doubt! Both your CFO and your CIO need permanent seats at the table, and what’s more – you should probably sit them together!
At Maxsum we take a seat-at-the-table approach by working with decision makers in organisations to build a business technology strategy that involves all arms of your organisation and generates real outcomes from business technology. Talk to us about a undertaking a Business Technology Review to chart the best way forward for your organisation’s Digital Transformation Journey. Call us today on: 1300 MAXSUM
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