For years, finance executives have sought to shed their bean-counter image and move into a more strategic role within the organization. Many have spent years shackled to the details of their complex budgeting and transaction processing systems, and so have had little time for value-added activities. And many of their IT counterparts are in the same boat. CIOs -- who have long been measured on their IT project management skills or the ROI of software-implementation projects -- have had little incentive to involve themselves in broader strategic initiatives. Yet some CIOs are being called on by their organization to step up and lead an enterprisewide performance improvement initiative.

For the CFO who has always focused on processing accounting transactions or the CIO who has excelled based on her project management skills, this type of responsibility may seem daunting. Finance and IT executives can take on such a challenge far more successfully if they work together on it. Corporate performance improvement projects -- and performance management software implementations, in particular -- are a fertile place for growing CFO-CIO bonds. In turn, a healthy, productive relationship between CFO and CIO will help both managers transform their function in the organization from tactician to strategic adviser.

Where the CFO and CIO Are Coming From

Traditionally, finance organizations have executed on three distinct activities: transaction processing, regulatory compliance, and strategic decision support. In the typical organization, the finance staff spends about half of its time managing transactions, such as outgoing payments or incoming receipts, and properly recording expenses and revenues. The other half of its time is split fairly evenly between compliance and strategic activities. Compliance is an important role for finance, but it also is tactical in nature. The finance department must ensure that the company has in place the appropriate policies and controls to prevent fraudulent transactions. Supporting corporate decisions through performance analytics and reporting is the finance professional's most strategic function. These activities include tracking appropriate financial metrics, such as earnings per share or return on capital; analyzing the financial performance of the business; and advising the CEO and other executives on how to achieve the business's strategic objectives. For a CFO who wants to increase his group's focus on strategic decision support, a logical place to start is to lead the implementation of an integrated business performance management (BPM) solution that will help finance and other managers monitor and optimize performance across the organization.

At the same time that finance is pressing to become more strategic, expectations of CIOs are growing. This means the IT function cannot rely on traditional actions alone, such as improving operating efficiency or reducing IT costs, to help the company meet its goals. "CIOs will need to concentrate on information as a leverage point to enhance efficiency, increase effectiveness, and support competitiveness," says Mark McDonald, group vice president and head of research for Gartner Executive Programs. "This also corresponds to the continued importance of business intelligence in 2007. CIOs will continue to be responsible for IT -- the mechanism. They can further play a greater role in leveraging information -- the understanding that drives performance and innovation." In the near future, the CIO's professional success will depend on her ability to align the technology priorities of IT with the business intelligence (BI) and performance management priorities of the organization.

Additionally, there is a growing demand that the IT organization begin to speak the language of the rest of the organization, which is to say the language of business and finance. Company boards and CEOs want to understand the added value that IT brings to the table. They want to understand the costs involved with the IT operation, the services it provides to the rest of the organization, and the business case and ROI associated with prospective future investments. In many IT organizations, this information is not easily and readily available. Pulling it together represents another potential entry point for close collaboration between IT and finance.

Why They Need Each Other

The first step for a CFO and CIO who desire to jointly transform themselves from transaction processor and project manager to strategic business advisers is to be sure they both understand clearly the strategic objectives of the business. The process of defining the strategic objectives of the organization is not a quick meeting of the "C-level" staff. It is typically a process and study led by an outside organization with subject matter expertise that requires thorough discussion and review across all segments and levels of the organization. By being involved in this process, the CFO and CIO begin to gain a much better understanding of the different departments and staff within the organization. Through analysis and study, the process of defining the company strategy map and those key performance indicators (KPIs) relevant to support that strategy across all layers of the organization unfolds.

The CFO and CIO should jointly oversee the formation and implementation of cross-functional performance teams, which work with managers across the organization to communicate the business strategy and a better understanding of the KPIs involved. By kicking off these teams, maintaining a level of involvement with the teams, and through consistent communication, the CFO and CIO begin to forge the executive-level sponsorship and involvement necessary for projects like this to take root and succeed. Plus, they enhance executive understanding of the business and build credibility for future initiatives by reinforcing the thought that all levels of the organization are involved in improving the company's performance.

What the CFO brings to this process is knowledge of performance management techniques such as strategy mapping, KPI identification, integrated planning with budgeting, dashboards and scorecards, and profitability analysis. Finance is driven here to lead cross-functional teams to determine and understand the business requirements of the organization and how the organization gets things done.

Cross-functional assessment of end users' needs and the technology underpinnings required to meet those needs must involve IT decision-makers. Typically, the IT team manages the company's broad BI strategy, and BPM applications have to dovetail with that strategy. In many organizations, the software selection process historically has only involved the IT department at the last minute to examine technology-oriented issues and give the purchase a stamp of technical approval. Moving forward, the CIO needs to understand the business drivers behind the request for a BPM application and how BPM will support the organization as a whole. Through this understanding and by working with the lines of business (LOBs), the IT department can recognize areas of challenge and proactively propose methods for performance improvement.

Finally, the CIO and CFO need to reach a mutual understanding about how to accurately define and capture the financial and operational data that will be managed as part of the BPM system, whether the data is internal or external and is manually or electronically input. Without this understanding, performance metrics may suffer from data quality issues and "multiple versions of the truth," making them less valuable for supporting strategic decisions. Working collaboratively here is critical for both parties because the CFO, alone, does not fully understand where necessary "similar" data might reside in the multiple systems that are used by the company. The CIO, alone, does not understand which financial metrics are critical and where they may overlap. Together, they can map data requirements and resolve the issues involved so as to present the organization with clean and accurate financial data that represents a "single version of the truth."

A good example of IT and finance working together to optimize their organization's performance management is the CIO-CFO team at Oregon Health and Science University in Portland. Diana Gernhart, the hospital's CFO, and John Dunn, hospital CIO, are both members of an administration team that meets twice a week. "Before I was part of this team, the IT department might hear about project requests after the decision was finalized," says Dunn. "Now that the CIO is part of the strategic planning, we understand the business drivers behind each request and can more effectively plan for and deliver our services." Thanks to this new involvement, the organization is depending on IT to add more value. "The role of the CIO has been elevated from a technical one to that of a chief strategist for IT issues," adds Dunn.

The CIO and CFO also frequently have candid discussions either before or after the formal twice-weekly meeting. Gernhart says, "We have an ongoing commitment to open communication and constantly strive to improve our CFO-CIO relationship." This regular contact helps facilitate a deep level of trust, promoting an environment of cooperation and mutual education -- elements essential to the success of any process improvement or performance management initiative.

Where Performance Management Can Take Them

When a CFO and CIO work in tandem on a performance management software implementation, the company overall benefits from a better BPM system. But the executives involved benefit as well. Undertaking a BPM initiative signals to the rest of the organization that the CFO is thinking outside the traditional boundaries of finance, and that the CIO is thinking outside the traditional IT position. They are also establishing themselves as leaders within their organization.

Perhaps the most important role of the CFO-CIO relationship in any BPM-related effort is that of executive sponsorship of the project. Many organizations create a solid strategy and put the wheels in motion for a performance management initiative, only to have their plans fail because of a lack of leadership. According to Robert Kaplan and David Norton, creators of the Balanced Scorecard methodology, less than 5 percent of the typical work force understands their organization's strategy. Communicating about corporate planning and setting expectations for employee performance are pivotal in driving better alignment of workers with corporate goals. To gain acceptance for a new BPM application and the process changes that will be necessary to optimize its use, corporate strategy must be communicated and understood throughout all layers of the organization. Having the CFO and CIO serve as the highly visible and active executive sponsors -- the "face" of the BPM effort organizationwide -- can spell the difference between significant corporate improvement and painful corporate failure.

When that significant corporate improvement happens and the organization's transaction processing, budgeting, and reporting activities become more efficient and effective, CFOs (and their staff) are freed up for increased strategic analysis and decision-making. Collaborating with the CFO, the CIO can ensure that the system delivers the accurate and timely insights required to drive performance. By working together to provide executive leadership for a BPM project, IT and finance managers can both empower the organization with strategic decision-making tools and cement their roles as strategic business advisers.

Tools for Performance-Driven Analysis Many CFOs make the mistake of assuming that the financial modules in an ERP solution will give them the ability to support strategic activities like decision support, budgeting, and planning. Often the reporting capabilities of these systems are designed to support transaction reporting rather than performance management reporting, so finance executives are unable to easily track and monitor key metrics. While implementing ERP helps reduce the time spent on processing core transactions -- such as accounts payable or receivables -- it does not traditionally address or support the performance-driven analysis required to make strategic decisions. By working together and understanding the business needs versus the true capabilities of the solutions selected, better decisions can be made in choosing tools to enhance the performance of the business.

Guy Weismantel, senior director of corporate marketing for enterprise performance management at Business Objects, has held leadership positions in corporate finance and internal audit.