No one person or department can be held responsible for a successful digital transformation. A shared vision and sense of togetherness are imperative across the organizational structure.
The success of an enterprise’s digital transformation hinges on the collaboration between the CTO and the CFO. Even today, in a lot of organizations, the roles of these two pivotal players are so distinct that there is hardly any overlap. The struggle to work together in such cases becomes an impediment in the transformation journey of the organization.
Chucking away obsolete reporting structures and job descriptions, however, is essential to capitalize on the true benefits of digital transformation. CTO-CFO collaboration could be a major factor distinguishing trailblazers from technology laggards.
Here’s how organizations can ensure a smoother CTO-CFO collaboration:
1. Updating organizational hierarchies and reporting structures
CIOs/CTOs and CFOs will need to hold joint responsibilities of certain tasks, which means that new tasks will be added and existing will be reshuffled. The success of such activities can only be ensured when both the CIO and the CFO come together to help the business adapt to the necessary changes.
2. Preparing the case for major IT investments
While only a CFO is regarded as the custodian of all costs, a CTO’s role will have to evolve in order to take cost-friendly, high-return decisions for a business. Moreover, a CFO will have to know the pros and cons of any upcoming technology to decide the budgets for the same. CTOs and CIOs can gain a lot from working closely with the CFO, who is in a strong position to assist procuring the board’s consent for any major IT investment.
3. Tracking and rewarding CTOs and CFOs for common goals
Historically, the performance of CTOs was measured purely on IT-related activities. Increasingly, CTOs have to become responsible for financial goals such as operating profits, inventory turns and cashflows, which directly affect the bottom line of a firm. The migration to a better form a technology is only justified if it helps the overall financial goals of an organization, be it higher revenues, lower costs or greater profits. Moreover, if no technological innovation happens, employee productivity will not improve, and there is a high chance of the organization lagging behind in terms of financial advantage as well. And, hence, CFOs too need to have goals related to technological investments.
4. Benefiting from the friction
When a CTO and a CFO work together, they gain from the knowledge transfer that happens between them, ultimately benefiting the organization which now has more informed resources and teams. Now, the key is to use the creative tension between the two approaches to create risk-balanced investment portfolios. One can’t just keep focussing on ROI, leaving innovation behind, nor can one invest in all high-risk projects without caring about ROI. Often, organizations have to base priorities on what projects will have the biggest impact on their end customers. A lot of strategy iteration will take place when two leaders come together to take business decisions. However, this is an integral part of the transformation process and will result in better action plans.
5. Empowering business with data
Data has already become the fuel for running any organization efficiently and competently. Both CTOs and CFOs sit on large amounts of data and are held responsible for a single source of truth. CIOs can help CFOs organise and analyse unstructured data, enabling better insight into financial data available from different sources. Since CFOs are responsible for making major financial decisions based on data, it is important for them to work with CIOs to paint an accurate picture of the present and future scenarios.
Ultimately, no one person or department can be held responsible for a successful digital transformation. A shared vision and sense of togetherness are imperative across the organizational structure. The pace of digital transformation is only going to increase in the coming years and the sooner organizations proactively challenge their existing ways of working, the better it will be for them. With the evolution of technology, the relationships between change leaders will also need to evolve, transform and thrive.
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