When it comes to personality types in business, the typical Chief Technology Officer (CTO) and Chief Financial Officer (CFO) are usually very different breeds. It can at times be difficult for both to see eye to eye on what the business needs for current activities and future growth, and this can hinder a company’s success, but there are ways for them to work together towards a common goal and live in relative harmony.
As technology plays an increasingly important role in the running of any business, the CTO has gone from simply being the head of the IT team to an integral member of the board. They are now expected to not only oversee the everyday running of the business network and IT infrastructure, but work with other high-level decision makers to build a plan for development and growth. When it comes to IT budgets and investments in technology, one of the main difficulties has been in getting the backing of the CFO, but it is vital for these two stakeholders to effectively work together in order to get the business where it wants to be.
The CTO will want to implement the most efficient and up to date technology to meet the company’s needs, but the CFO holds the purse strings, and will understandably want to keep spend on IT (as with any other department) within an affordable range and within the overall business strategy, which can lead to a halt on investment, and frustration for the IT team.
How do you get them both singing from the same hymn sheet, so to speak, in order to ensure the business has the IT support and infrastructure it needs?
According to this techrepublic article, a third of CTOs report to their company’s CFO, while another third report directly to the CEO, and in SMEs, where there may not be a defined CFO role, that also amounts to reporting directly to the boss. Either way, they need to argue and answer for further investment in IT by demonstrating its value.
Most of the time, friction comes down to budgets. Traditionally, the CTO’s expertise lies in IT, not finances, so it can be difficult for them to manage a budget or devise plans for more investment. They need to keep the business running, maintain productivity, and also look to improvements or upgrades, but their hands are often tied by budgetary constraints, meaning they need to settle for dealing with the here and now, rather than what the business will need in the future.
The CFO, on the other hand, is not part of the tech team, and so may find it difficult to understand just where all of that IT budget is going, especially if it doesn’t show a tangible return on investment. As such, they can often see IT as an ongoing expense, rather than an investment, whereas the opposite should be true, and are reluctant to sign off on an increase in the IT budget.
It is necessary, therefore, for both the CTO and the CFO (or whoever controls the finances in a company) to work together, forming a better understanding of each other’s challenges, and creating a viable business development strategy.
When you think about it, though the CTO and CFO may be very different people, their roles boil down to the same thing: ensuring the business is currently running efficiently and building a strategy for future growth. A strong relationship between the CTO and CFO comes down to communication and collaboration.
The CTO’s Role
The CTO needs to think in terms of the business and prove value in a way the CFO will understand. Sure, he can demonstrate that the organisation’s cyber security is up to scratch and will be compliant with GDPR, for example, but he must show how that brings value to the business by eliminating the risk of fines and downtime, and by increasing the company’s reliability.
He can show how moving from an in-house server to cloud computing increases efficiency, but he must also prove how that will cut costs and generate more business in the future. He can argue for a move to a remote working policy whereby staff can access the company’s network on mobile devices, but he needs to show how this will save on hardware costs.
In other words, it’s speaking to the CFO in a language he understands.
It is also useful for the CTO to have a comprehensive overview of the current IT spend, and to be able to break it down into minute detail - for example, how much IT support costs per office, or per team member. They should also be open to assessing or auditing the current IT infrastructure, and exploring alternatives, to show that they are on the same team as the CFO when it comes to providing value to the business.
For example, can the company get rid of old applications that are no longer needed? Could they outsource IT support to an external service provider who could also help them save on hardware and software purchases through leasing or volume licensing?
The CFO’s Role
Collaboration should work both ways though, and the CFO also needs to show more involvement in the IT agenda, and to work with the CTO to come up with strategies (and the budget) to make the data-driven investments needed for growth and innovation.
The CFO needs to consider how the CTO and tech team can help with business challenges, looking at the investments IT is making or highlighting as critical for future success, how IT can support the company’s growth, what type of data the IT team is (or could be) providing to inform the business on strategy, and how the IT team is governing, protecting and maintaining its investments.
When he understands all of this, he can make more informed decisions regarding how much the business should be investing in IT, not just in order to keep things running efficiently, but to stay ahead of the competition with the right innovations and upgrades.
Providing a range of outsourced IT support services in London, Optimity can advise on the best ways to invest in IT to help your business grow, and can help devise a strategy and implement the tech upgrades your business needs to keep both the CTO and CFO happy.
Get in touch to find out how we can help your business grow with the right IT investment.