New opportunities and threats come hurtling onto the company agenda faster than ever, demanding faster responses. They include new customer segments to pursue, marketing campaigns to tweak, customer inquiries to answer, and, alas, crises to manage, among many tasks. The result is that corporate leaders must build “real-time” businesses with cloud-based digital capabilities that enable them to act quickly and competitively.
Dynamic Duo of CFO and CIO
It goes without saying that chief information and technology officers play a critical role here. But if a digital transformation to a real-time business is to succeed, chief financial officers must play a key role, too. Two recent TCS studies – one on CIOs and the other on CFOs – show this to be the case.
In the latest TCS study of CFOs and digital transformation, 61% said the CIO/CTO took the lead in identifying technologies their companies would need over the next three years to tap into larger industry digital ecosystems. (Read more about this topic in PR Krishnan’s blog post: “The CIO’s Critical New Role: Digital Ecosystem Navigator” And the technology that CIOs/CTOs prefer above all others is cloud computing.
In TCS’ CIO study, more than 90% of 1,010 CIOs, CTOs and other IT executives said cloud computing has been among the top three technologies with the greatest impact on their companies’ digitization efforts this decade.
Yet digitally transforming a large company cannot be the sole or primary responsibility of the CIO/CTO. CFOs have a crucial role. Since they oversee overall corporate spending, they are in the best position to make the financial justification for new technology-related initiatives. As such, their support plays an important part in pushing necessary changes to business processes and systems.
More than half of CFOs (58%) surveyed in the TCS 2020 CFO study said they are not only in charge of digitizing the finance function, they also play a key role in digitizing the entire business and taking advantage of larger digital ecosystems. (Check out the CFO Study initial findings interactive infogram for more details.) We think this indicates that a higher percentage of CFOs should be a key driver for this transformation because they have an essential enterprise-wide change management remit.
Top CFO Priorities
To be sure, CFOs see digital technology as crucial to their department and the larger business over the next decade. They believe that by 2025 they will be focused on four digital issues above all others:
Determine the economic viability of digital business models
Making decisions on capital allocation for digital transformation
Developing new digitally-enabled products and services
Reshaping advanced digital analytics to be embedded into the corporate strategy
But, in our view, these priorities need to take precedence now – not in six years’ time.
How can they do it? We recommend that CFOs engage with and form a special working relationship with their CIO/CTO. Mixing technical know-how with financial and change-management skills will make for a powerful combination.
4 Ways the CIO and CFO Can Collaborate
So how should the CIO/CTO and CFO collaborate? We see four main ways:
1. Build the business case for transitioning to the cloud
In the long term, digital transformation will save money, make the company more efficient, and give the leaders the tools to win. But, in the short term, it will require a significant upfront investment. The CIO/CTO will need to undertake a comprehensive review of the IT systems that will be moved to the cloud: the overall infrastructure, as well as the databases, applications and related middleware platforms. Costing the migration – and its value – will be the task of the CFO. And deciding on priorities -whether to move systems fully or partially to the cloud – will be something they should work on together.
2. Create an orderly timetable for migrating key business functions to the cloud
Companies are already facing significant disruption from external factors. So the last thing they want is any self-inflicted disruption caused by a poorly planned digital transformation program. The CFO and the CIO/CTO schedule must carefully determine what gets moved to the cloud – and when. As an example, we have seen the active involvement of the CFO with the CIO in a Belgian government organization to decide on the cloud migration roadmap based on parameters like
Seasonal demand and load variations of the applications
Availability of the business function owner of the application during the cutover
Business criticality and annual monetary outflow to maintain the applications
All of these parameters were all factored in as constraints to frame the final roadmap for their existing application landscape to migrate to the cloud. This should be done in an evolutionary way so that the day-to-day business is not interrupted. One of the first functions to move to the cloud could be the finance function – not least because most CFOs are enthusiastic believers in the positive impact that cloud computing will have on their function. If it can be shown to work effectively, then such a “quick win” could help build support for the digital transformation among the company’s other functions.
3. Cross-functional digital innovation promotion
A key way that CIO/CTOs and CFOs need to work together to drive change is through what we call “performance partnerships.” These partnerships involve executives from sales, marketing, customer service, finance and other functions redesigning business processes that cross their departments. Initially, these partnerships will have to be focused on the #1 task of migrating the business to the cloud. But their discussions and experience of working together will likely yield new ideas about how the company can improve operational effectiveness. The key role of the CFO will be to ascertain the financial returns from cross-functional data sharing and digital process reengineering. Experience shows that the payback will be higher from cross-functional initiatives rather than a digital transformation of individual business functions.
4. Drive Organizational Change
One of the key blockers to a digital transformation is linear organizational processes. Digital transformation does not work in a linear fashion, it requires an entirely different cadence of change and skill sets. Some new roles need to be introduced to run a digital transformation; for example, strong agile coaches to lead cross-functional teams to enable the transformation and engage with key cross-functional individuals within the company. This requires active involvement and guidance from the CFO so that the CIO can drive the digital strategy.
If the CIO/CTO and the CFO can work together using this kind of collaborative, cross-functional approach, it will help them go a long way enabling access to today’s digital ecosystems and create an agile, real-time business.
Get the latest TCS CFO Study Reports
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About the author(s)
Suranjan Chatterjee is the Global Head, Product Management, in Business & Technology Services Group at Tata Consultancy Services (TCS). In this role he has been entrusted to help the business units conceive, craft, sell and deliver large, multi-disciplinary digital transformation initiatives for TCS’ global clientele across industries. He is responsible to ensure seamless orchestration across a multitude of service streams including products, platforms and niche digital offerings leading to solution innovation and differentiated articulation to accelerate growth.
In his earlier role Suranjan led TCS’ Cloud Applications business unit which helped world’s leading enterprises in multi-modal cloud adoption. It covered application migration, cloud-native modernization, API-fication, higher order cloud services innovation etc. to realize agility, scale and resilience for business.
Suranjan has over 24 years of experience in TCS, lending his expertise on multiple enterprise transformation programs both as a consultant and business leader. He held several leadership positions in Cloud and ERP businesses across presales, delivery and CoE functions.
Suranjan holds an Honors degree in Physics and a B.Tech in Electronics & Telecommunications. He resides in Kolkata, India with his wife. Outside of work, Suranjan is an avid traveler, a wildlife photography enthusiast and a connoisseur of world cinema.