How can CFOs and CIOs best collaborate to drive innovation in technology?

The relationship between the CFO and CIO is one of the most important partnerships in any business. However, CIOs may fall too much in love with new technologies, whereas CFOs are focused strongly on short-term returns. Here’s how to bridge that gap and maximize your technology investment.

Author: Thomas Mehlkopf, Head of General Manager and Head of Working Capital Management CoE at SAP

In the modern digitized economy, successfully leveraging technology has become the most decisive competitive advantage on offer to any business. One of the most important factors in doing so successfully is optimizing the relationship between the Chief Financial Officer (CFO) and Chief Information Officer (CIO).

These two roles, once confined to the more or less separate lanes of technology and finance, are now pivotal partners in achieving the kind of technology-driven transformation that not only enhances delivery, but also creates lasting value.

It’s not a case of CFOs vs CIOs. When both leaders collaborate effectively, harnessing their complementary skills and perspectives, they’re uniquely positioned to shape the future of their organizations. Shared commitments to continuous learning, open communication, and driving innovation are essential – along with a spirit of open collaboration.

The changing roles of CFOs and CIOs

Traditionally, CIOs focused on managing a company’s technology infrastructure, while CFOs oversaw its financial health and capital allocation. However, digital transformation has blurred these lines.

Today, CIOs are seen as key drivers of innovation, responsible for developing or acquiring new technologies that will improve business outcomes. At the same time, the role of CFOs has expanded to cover broader strategic responsibilities. Crucially, this includes evaluating the financial impact of investments in new tech and aligning them with long-term business goals.

Here are our tips and strategies for ensuring the CFO-CIO relationship delivers to the fullest.

1. Develop a shared vision for technology’s role

If you’re going to work together towards a common goal, it helps if you can agree on what that goal is.

To drive innovation successfully, the CFO and CIO must align on a shared vision of how technology will enable business success. This involves more than just agreeing on budgets – it needs a complete understanding of the company’s long-term objectives and how technology can bring you along the path toward them.

It will require a lot of discussion and debate, but also mutual respect for one another’s perspective and expertise.

The CFO’s financial angle complements the CIO’s technical expertise. CIOs may focus on how such technologies can drive operational efficiencies or enhance customer experiences, while CFOs are best placed to evaluate potential returns on investment and risks associated with early adoption.

Once these points of view have been integrated, it will be much easier to ensure that investments in tech are consistent with your broader business goals.

2. Communication, communication, communication

Every organization with more than a handful of people is vulnerable to siloing, and it can be especially risky for organizations with superficially different specialties such as CFO and CIO.

It may sound like a truism, but maintaining open and frequent channels of communication is absolutely vital – and unfortunately, easier said than done, especially in larger companies. Regular dialogue allows both leaders to share insights, understand each other’s challenges, and co-create solutions. Without strong communication, priorities can become misaligned, leading to uncoordinated efforts – and ultimately wasted time and cash.

Taking it further, the CFO plays a crucial role in translating tech investments into financial forecasts – i.e. deciding if the spend is worth it. Through regular, transparent conversations, CFOs and CIOs can together gather the necessary information to inform good decision-making.

3. Create joint accountability for tech investments

There’s no getting around it: innovation often involves risk. It can require the deployment of substantial capital, and while the CIO may see these investments as necessary for staying ahead of competitors, the CFO must balance this with the need to maintain financial stability.

One way to navigate this tension is to establish joint accountability. It can be a good idea to create a framework where the CFO and CIO have a shared responsibility for the success of technology investments. This means creating key performance indicators (KPIs) that reflect both technological and financial success of a project – i.e. measuring ROI and improved outcomes in whatever domain the solution is introduced.

Additionally, by leveraging their shared expertise, CFOs and CIOs can lead organizations through the uncertainty that often accompanies technological innovation. Taken together, their areas of responsibility cover some of a company’s greatest value-generating wings, and they are well placed to share insights with other stakeholders and bring them along on the innovation journey.

Also, more prosaically, on a personal level, shared accountability can be quite the motivator.

4. Leverage data and analytics for informed decision-making

It’s tough to flourish in the information economy without good information. In practice, this means a dedication to making data-driven decisions.

To achieve this, the CIO’s role in implementing the necessary data infrastructure complements the CFO’s focus on deriving actionable insights from financial data. Taken together, both functions can make more informed, holistic decisions regarding the potential value of an investment in technology and generate insights to share with other senior decision-makers in an organization.

5. Align budgeting processes with tech strategy

A common area of friction between CFOs and CIOs is budgeting for technology. Technology investments can be costly, and as pressures from stakeholders grows and the menu of new digital solutions lengthens, the CFO’s role in ensuring that these investments yield a high return is critical.

To overcome these challenges, it’s a good idea to foster a flexible approach to budgeting that adapts as the company’s technology needs evolve. For example, rather than setting a fixed annual IT budget, both leaders can collaborate to create a dynamic budget that reflects requirements that can shift rapidly, such as shifting to a more AI-driven approach or increasing cybersecurity measures. Methods like Zero-Based Budgeting with a clear focus on value creation can be quite beneficial.

Preparing for a future of constant change

A wise man once said, “The only constant is change.” As new technologies like AI and blockchain mature, and new ones come over the horizon, it’s vital that CFOs and CIOs work together to lead their organizations through the next wave of change.

This could include everything from developing strategies for integrating generative AI, harnessing expanding cloud capabilities, or building plans to enhance digital literacy across their organization.

When these two leaders collaborate successfully, it becomes more likely that companies will stay competitive, resilient, and future-ready – and the best way to do this is to create a culture of embracing these opportunities when they arise.

Being prepared to embrace change has never been more important – because even if you choose to forego the opportunity a new technology offers, there’s no guarantee your competitors will do the same.