This story, written by Steve Dunne, originally appeared on the Workday blog. We thought our local readers would also find it interesting.
As established organisations respond to the challenges of digital disruption, they find themselves needing to collaborate with an external ecosystem of partners, from small start-ups to large technology providers. However, it is not just external collaboration that must evolve: Internal C-suite collaboration needs to change, too.
To keep pace with the demands of the digital economy, companies need strong collaboration across their major assets, namely capital, technology and people. Traditional ways of operating no longer apply in a world where information and data are at people's fingertips and where roles are being transformed or replaced by artificial intelligence.
For businesses to change how they operate, finance leaders need to orchestrate strong collaboration among the critical triumvirate of the CFO, CIO and CHRO. Why? Simply put, closer collaboration between the finance team and these two functions can bring significant benefits.
Our "Finance Redefined: Workday Global Finance Leader Survey" – which gauged the views of more than 670 CFOs and senior finance leaders around the world – identified a range of areas where finance can add value through collaborative contributions to the technology and human capital agendas.
When it comes to the finance function collaborating with IT leaders, our research shows that the biggest benefits to the enterprise's digital agenda can include:
Three key areas where the finance function can add value to the enterprise's human capital agenda through collaboration include:
While people may understand the benefits of collaboration, doing it well is another story. Our research found that despite the reported benefits of a strong culture of collaboration, only 31 percent of finance leaders report a seamless relationship with the CHRO, while 27 percent report the same with the CIO. Even rarer is effective collaboration across all three functions: our research found that only 6 percent of CFOs have seamless relationships with both the CIO and CHRO.
Part of the problem is that in the past functions have often pursued narrower goals, with people working in their silos, barriers emerging between departments, and incompatible team cultures that can hinder understanding and communication. To break down organisational silos, finance leaders need to identify the key roadblocks that stand in the way of better cooperation with IT and HR.
Our research found that the CFO-CIO relationship needs particular attention. While three-quarters of finance leaders said that the two roles need to collaborate in order to drive innovation, more than half noted that this relationship is characterised by tension and disagreement. Meanwhile, two-thirds said they believed that IT executives are reluctant to collaborate with their finance peers.
Progressive and innovative CFOs look to the CIO to bring knowledge and skills to the finance function. – Matt Schwenderman, principal with Deloitte Consulting LLP
To improve matters, CFOs need to recognise the contribution the IT function can provide when it comes to the bigger business strategy – although shadow IT projects often address immediate pain points, there can be unintended consequences for the business down the road.
Part of the problem may be due to history: CIOs often reported to CFOs, so the CFO is not used to seeing the CIO as a peer. For Deloitte's Matt Schwenderman, principal with Deloitte Consulting LLP, a relationship of equals is the way forward. "The CFOs that I consider to be progressive and innovative have a very different view of that relationship," he says. "They actually look to the CIO for ways to improve their own function and are using the CIO to bring knowledge and skills that can be leveraged by finance."
Differing perspectives can also result in a considerable gulf between finance and HR leaders. A report by EY looking at the relationship between CFO and CHRO, "Partnering for Performance," pointed out that "CFOs have tended to view human capital primarily as a cost, while CHROs have viewed it primarily as an asset that requires investment."
Effective collaboration requires people to question their entrenched assumptions and behaviour.
Many CFOs, however, are determined to overcome these perception differences. "To drive productivity and customer satisfaction, it's important for finance and HR leaders to work closely to inform decisions on investments in facilities and benefits, which bring value to our employees and improve company culture," says Robynne Sisco, co-president and CFO at Workday. "Finance and HR also need to work closely to understand hiring plans and where we need to invest in growing teams to move our business forward, or which employee programs are financially beneficial to help boost employee morale and productivity."
This is already happening in some organisations. Rick Rodick, CFO of TELUS International, says he is working closely with the company’s CHRO, particularly when it comes to providing the necessary data. "The CHRO needs more data all the time because we're trying to see whether people are being efficiently utilised and whether we're charging properly for their time," he explains. "Our billed hours are our revenue, so if we don't charge people out properly it affects our profitability. In the next few years, we're going to be able to give the CHRO more information than she's ever had."
As well as building a relationship with the IT and HR leaders, CFOs can also orchestrate a three-part harmony. "While HR, IT and finance used to work pretty much in isolation, this is changing," says Lena Shishkina, head of finance, EMEA, Asia Pacific, and Japan at Workday. "We see this a lot with our prospective customers. When the company needs to drive critical change, it will be about talent; it will be about scale; it will be about systems and financial results."
Of course, while effective collaboration is about having the right processes – including ways to share data – it is also about human relationships. Shishkina points out that effective collaboration requires people to question their entrenched assumptions and behaviour. "It's important to get ourselves out of our comfort zone and come together on projects where we can do something more for the company," she says.
The companion piece to this article – "Global Finance Leader Study: Why the CFO must also be the Chief Collaboration Officer" – looks at three ways in which the CFO can effectively collaborate more broadly across the C-suite.
For the full research findings behind the "Finance Redefined" global study, read the report here.
About the Workday Global Finance Leader Study
We surveyed more than 670 finance leaders across the Americas, Europe, Asia Pacific and South Africa covering 10 main sectors from September 2017 to January 2018. Over one-third (38 percent) came from large organisations with more than $1 billion annual revenues, with 35 percent between $500 million and $1 billion, and 27 percent between $250 million and $500 million. Over one-third of respondents were CFOs, finance directors, or chief accounting officers/controllers, and the remaining were drawn from senior finance roles, such as head of financial planning and analysis or vice president of financial operations.