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CFO-CIO collaboration to navigate the Covid landscape

It is no surprise that CFOs are under pressure to dissect company spend; however, the explosion of data enables us to pinpoint areas that need attention. Often this involves IT spend, writes Park Place Technologies CFO Andrew Gehrlein

IT has evolved from being a background cost centre to a critical department, partly due to it becoming a place where data is housed, manipulated and made available.

Especially during times such as these, data is core to providing a more informed and strategic voice helping CFOs improve and adapt their strategies; however, while the CFO is adept at measuring costs, managing the balance sheet and navigating murky waters, determining capabilities and staying ahead of tech trends requires partnership with the CIO – now more than ever as IT formats data and provides insight into what might be most helpful to finance.

 The Covid-19 landscape

Since late March 2020, the UK and its respective businesses have had to adapt to a new set of challenges atypical to the familiar ‘business as usual’ way of working.

Increased working from home hours applies added stress to both bandwidth and server accessibility for businesses’ IT departments, and it is easy for a CFO to become unaware of their company’s specific technological nuances. The pandemic brings unprecedented financial challenges and pressures on CIOs to offer the CFO a new perspective on which tech costs are presently needed and which can be done without.

For example, buying equipment is a cash outlay, and companies are currently laser-focused on cashflow and expenses. Some expenditures will have to be delayed as cash is prioritised away from capital expenses. Many CFOs may be unaware of which IT costs to reduce without a collaborative conversation with the CIO.

A top tip for CFOs to consider using with their CIO is a regular, detailed review of all ad hoc expenses across the company. Together, the two can look for technology items that should be aggregated or that do not comply with expected standards. This process requires CIO input and experience.

What IT can offer

In collaborating with IT leaders, I have learned that IT is uniquely positioned to scan a company for technology-enabled improvements: revenue opportunities, productivity increases, and cost savings. When the CIO and CFO work together to find and implement improvements, the company becomes more effective than when they take a siloed approach.

The Covid-19 pandemic presents an opportunity to identify improvements. As people are suddenly forced into new models, traditional ways of work can change. A CFO-CIO collaboration can present opportunities in office utilisation, software purchases and hardware deployment, just to name a few.

While hardware and software expenses are relatively easy to monitor and measure against company metrics, the implementation of IT projects is a key area for CFO-CIO collaboration. Every project brought to IT can have cost structures that include outside purchases as well as internal labour. Projects need to bring value to the company, and the calculation of that value, perhaps in the form of ROI, requires the CIO and CFO to jointly calculate the value accurately, and measure the results once the project is in place.

Consulting your CIO with the ongoing process analysis team enables the CFO to look and find cost-reduction opportunities that do not impact customer satisfaction. This input is key to ensuring a potential financial decision that may benefit the company and does not touch customer service.

CFOs and CIOs can also protect revenues and business-critical IT by ‘sweating’ IT assets for longer through value-added life-cycle support services. Maximising payback and ROI on hardware infrastructure can also yield financial benefits for the longer term.

Dual dependence

It can be very difficult for CFOs to keep up with IT; it evolves so rapidly and requires such specialist knowledge that generalists can be left in the dust when it comes to progress.

At the same time, technology often offers glitzy new products, and it is imperative that IT professionals stay focused on what type of capital is available, where they want to spend it, and how their values align with the business. CIO collaboration helps to validate the financials of development projects. A working knowledge of ever-changing standards in technology protects financial projections and budgets.

CFOs focus on maintaining activity without increasing expenses. Gartner has reported that third-party maintenance is less expensive than what OEMS offer, and the service is just as good. If anybody came to you and said: “You’re paying £100,000 for this service. I can do it for £50,000-60,000 and I’m going to do it better,” then any CFO would take that deal – but it requires CIO scrutiny and expertise.

We all hope the pandemic passes quickly, but the long-term necessity of CFO-CIO collaboration will remain a part of any business’s evolution, strategy and health.

 

 

 

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