Where IT Reports

Is it really that important to report to the CEO, not the CFO?

By N. Dean Meyer
Thu, May 31, 2007

CIO — Last week, one of my coaching clients, the CIO in a mid-sized manufacturing company, was so frustrated that he was on the verge of quitting his job. Ernie felt he doesn't have the clout he needs to do his job, and this is primarily because he reports to the CFO rather than the CEO.


After talking through the situation, we came to two conclusions. First, "clout" isn't what Ernie needs. The problem that triggered his frustration was a business unit leadera clientwho was not going along with the ERP initiative that IT felt responsible for implementing. After reviewing my prior Beneath the Buzz column on ERP, Ernie realized that IT's job is to sell clients what they want to buy. IT cannot force ERP on them "for the good of the corporation"that mission is doomed from the start.

Second, we agreed that reporting directly to the CEO would not have resolved this situation. Indeed, it isn't even an issue that should concern a CIO. Here's why we came to that conclusion.

Why Report to the CEO
Ernie rightly pointed out the value of reporting directly to the CEO (aside from the obvious ego boost and maybe even better compensation). Direct reporting would give him a "seat at the table"involvement in corporate executive meetings.

If Ernie were involved in corporate strategies at that level, he could not only better support the business; it would give him the chance to contribute to strategy decisions, perhaps pointing out business opportunities that are enabled by IT and otherwise wouldn't be possiblethe opportunities at the top of the stair-steps of IT strategic value (described in another prior Beneath the Buzz column).

Furthermore, it would give Ernie the perceived rank that would help to open doors. He'd be more comfortable calling other corporate executives to resolve issues that occur at lower levels, talk about their businesses and find high-payoff opportunities for IT.

Beyond that, with such a position, other executives might get the message that IT is indeed important to the company. That, too, might open doors. And, of course, there's the matter of "clout." Ernie understands that he can't use power to beat clients into submission; as an internal service provider, he knows he's got to earn clients' business by delivering value, performance and excellent relationships.

Still, clout may be advantageous. As a direct report to the CEO, a CIO might be in a better position to set policies that coordinate and control all IT (even the decentralized IT groups that don't report to him).

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