There is growing collaboration between chief financial officers (CFOs) and their IT-focused counterparts or chief information officers (CIOs). But a self-confessed lack of understanding of IT issues among finance executives alongside a tendency to view IT as a cost center rather than an asset poses a significant challenge, both to the relationship and to the growth of the business.
The findings of an EY global survey of 652 CFOs and a series of in-depth interviews with CFOs, CIOs and EY professionals reveal that CFOs are increasingly involved in managing cybersecurity, establishing information management strategies and processes, transitioning to a digital IT function and creating an analytics-driven organization.
“In today’s digital economy, the financial well-being of an enterprise is dependent on the health of CFO-CIO relationship. In order to succeed, organizations must make bold technology investment decisions that are driven by corporate strategy, while managing a range of severe risks, such as cybersecurity and data privacy concerns” says Julie Teigland, EMEIA CFO program leader for EY.
“This mission-critical convergence of technology, investment strategy and risk has elevated the CFO-CIO relationship to new levels of importance” she adds.
Although the need to move in this direction is driving collaboration between finance executives and their IT-focused counterparts, CFOs “continue to struggle with balancing their responsibility to maintain cost discipline with more strategic ambitions, such as setting the agenda for change” says the report.
While two-thirds of the CFOs surveyed (66 percent) say managing cybersecurity is a high or very high priority – in many cases they have already been victims – they do not necessarily understand what a mature cybersecurity capability looks like, so they can invest in the right initiatives.
This lack of understanding was identified in the report as the top obstacle to a closer working relationship with the CIO, with 44 percent of CFOs citing it as one of their top three barriers. “The tendency for CIOs to discuss cybersecurity issues in technical jargon, rather than business language, can also block fast decision-making and action” it says.
“Cybersecurity preparation is all about understanding what the business is trying to protect. Some CFOs are trying to understand the technical detail when they shouldn’t be,” says Ken Allan, Global Cybersecurity Leader for EY. “CFOs should also ensure the whole organization has a tested plan in place to ensure they are ready to respond when the inevitable breach occurs” he adds.
New digital technologies are also demanding a significant change of the IT function and a more agile infrastructure. For the CFO, this means shifting the digital IT investment mindset from one of capital expenditure (Capex) to operational expenditure (Opex), according to EY.
“Among the 652 CFOs surveyed, just fewer than 50 percent of those who have made transitioning the IT function to a digital world a very high priority report EBITDA growth of greater than 10 percent over the last three years. Only 35 percent of CFOs who have not made transitioning the IT function to a digital world achieved the same level of growth” says the report.
It outlines ways in which CFOs and CIOs can increase their collaboration.
“There’s a huge opportunity for CFOs to be a champion for advancing the analytics agenda — not only within finance, but also, given how CFOs are involved in other parts of the organization, for embedding it across the firm” says Chris Mazzei, Global Chief Analytics Officer, EY.
These are also discussions that should be had at boardroom level, but – judging by the record so far on cybersecurity – there are a surprising number of ostriches in corporate boardrooms.
This article was written by Dina Medland from Forbes and was legally licensed through the NewsCred publisher network.