Best Practices

How CFOs and CTOs can work together to drive the business forward

Although a priority for most modern organizations, digital transformation can seem unnecessarily disruptive, especially when financial headwinds impact businesses and CFOs are tasked with reducing spending and mitigating risks. These seemingly conflicting goals — digital transformation inherently requires some degree of investment — can create friction between a company's finance and tech organizations.  

When you dig deeper, there’s more alignment between the CTO and CFO than it seems. To understand where priorities overlap, strive for transparent, collaborative relationships built on trust. With a focus on context and collaboration, CTOs and CFOs can develop a strong partnership that encourages innovation, increases top-of-line growth, and ultimately drives the business forward faster.

Ask for and offer context

CFOs often need to rely on CTOs to identify technological enhancements that will push the company forward while delivering value for the bottom line. The whole business benefits if the CTO and CFO can lean on each other to identify opportunities and determine the ROI of new technology. CFOs may have visibility into the dollar cost of technology spends, but need more context to understand the time savings or other benefits that spend provides for the team. What might seem unnecessary to the finance function could pay itself back in terms of time saved for the product team. Before giving directives to cut particular spends, CFOs should ask questions and understand the total benefits of an investment. Avoid weighing in on vendor selection based solely on pricing, and try to understand the holistic value a chosen vendor is bringing to the team.

It’s important to understand how the technology organization functions. Get to know the language and mechanics of infrastructure. If cloud cost is growing, ask why. Ask about the long-term plans for systems. Are there plans to make architectural changes or pursue new products in the next 6-12 months? What’s the strategy behind decisions being made?

Provide context as often as you ask for it. If growing cloud costs are causing budgetary concerns, explain why it’s an issue. Offer for someone from the finance team to help look at cloud spend reports to find areas where there may be opportunities to save. Educate the CTO on cross-functional goals, the planning process, and the strategic business drivers you see as a cross-functional leader. This broader business context will help them make decisions and ensure closer alignment between leaders.

Speak the same language

Align on the key performance indicators (KPIs) and measurement frameworks you’ll use to identify successful initiatives. It’s helpful if the CFO can understand at a high level how the technology organization functions — how the product is built, how the roadmap is determined, and what the priorities are for the team.

Seek opportunities for better collaboration

With a deeper understanding of priorities and a clear picture of where goals align, CFOs and CTOs can find further areas of collaboration. For example, cloud costs are typically SaaS organizations' most significant technology investment after people. There are aspects of cloud cost management that don’t require engineers to drive them, meaning CFOs can assign a dedicated partner to review cloud bills, identify areas of savings, and negotiate with vendors. 

Additionally, a lack of visibility into the financials and budgets for their organization is often a pain point for CTOs. Slow, manual processes and a lack of transparency can cause unnecessary friction between teams. Determine ways to streamline and manage top-down vs. bottom-up budgeting processes, especially with headcount planning. Enable ways for CTOs to self-service without having to go through arduous, manual processes to obtain relevant information that they need to make decisions. To help with this, FP&A software solutions like Vareto can integrate with a variety of tools to pull in the latest spend actuals and create up-to-date reports. 

Build something great, together

Overall, finance leaders who develop a working knowledge of the problems CTOs are trying to solve are better positioned to find synergies between broader business goals and the goals of the tech organization, better-enabling CTOs to drive digital transformation forward.

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