In a recent survey of midmarket CIOs and IT executives, nearly half said they report directly to the CEO, while 23 percent report to the CFO.\u00a0\nCIOs are less frequently tasked with traditional technology management functions such as systems and infrastructure, rather their time is spent on growth strategies and developing stakeholder relationships.\nSo, how does organizational reporting structure affect a CIO\u2019s ability to negotiate for budget and enable them to leverage the latest technology that help their midmarket company stay ahead of industry competition?\nA direct line to the top\nWhile a direct reporting line to the CEO typically equates to increased visibility, stronger sponsorship of efforts and a better overall collaborative environment, Joel Wolfe, vice president and CIO at J.W. Energy in Addison, Texas, said a couple of key variables can significantly affect the process regardless of reporting lines.\u00a0\n\n\nJoel Wolfe, CIO, J.W. Energy\n\n\n\u201cHow well does IT provide detailed visibility on all technology spend? Those who do this well will always have the upper hand in non-standard negotiations,\u201d he said.\nThe historical track of the CEO\u2014be it sales, marketing, finance or operations\u2014also directly impacts the budgeting process, as well as the company\u2019s overall culture.\nAt Dallas-based Corner Bakery Caf\u00e9, Minh Le, senior vice president of IT, shared that his reporting directly to an innovation-driven CEO makes for smoother budget negotiations.\nIn his own professional experience, Michael Whang, CIO at Amtech Systems in Tempe, Arizona, said he prefers reporting to the CEO over the CFO for IT budgeting and strategy.\n+ Also on CIO:\u00a0More CIOs report to the CEO, underscoring IT\u2019s rising importance +\nCFOs tend to get bogged down with quantitative information such as ROI, cost benefit analysis and payback periods\u2014all of which are important in building the business case\u2014but analytics have a tendency to paralyze decision making.\nAs the head of the company, the CEO can take a holistic, qualitative view of the business benefits to IT\u2019s spend. However, the onus does fall on CIOs to develop relationships and maintain open communication lines across the C-suite.\n\u201cWith additional peer support, the endeavor to persuade the CEO to yes is much easier than without,\u201d Whang noted.\n\n\nTroy Klement, VP of IT,\u00a0Genex Cooperative and Cooperative Resources International\n\n\nAt Genex Cooperative and Cooperative Resources International, Vice President of IT Troy Klement said he\u2019s watched the reporting structure transition between the CFO and CEO a few times in the last dozen years. When he moved into his post in 2014, IT\u2019s importance was increasingly apparent, but performance levels were lagging.\n\u201cThe IT organization reporting to the CFO put too much focus on the financial impact of IT operations and not enough focus on IT\u2019s impact on business operations and growth,\u201d he said. \u201cMoving the IT organization up to the C-suite allowed for more direct visibility of business initiatives, challenges and operations.\nThough it\u2019s more a process than an exact science, Klement added that connecting technology and infrastructure investments to business initiatives aligned with the company\u2019s strategic plan is a critical shift for the IT organization.\nClearly defining soft benefits\nWhile it would be easy to assume that the path to budget negotiations for technology investments may be smoother with a direct line to the head of the company, there are always exceptions to the rule.\n\n\nMike O'Neil, Director of IT,\u00a0Hydradyne\u00a0\n\n\nBoth Mike O\u2019Neil of Hydradyne and Walt Kolodziey of Paperworks Industries shared that their current respective CFOs to whom they report bring stronger technical backgrounds to their financial leadership roles than those of the companies\u2019 current CEOs.\nCIOs must justify IT investments with tangible productivity gains that may not always be substantiated by pure financial means, according to Vinit Kholi of Sibcy Cline Realtors. He points to cloud services and Microsoft Office 365 as examples.\u00a0\n\u201cCompanies have to clearly define their need and then follow up to ensure tools that impact the whole organization are implemented in a way that adds value for the users. Budgetary discussions become incidental if the business case is strongly presented,\u201d Kholi said.\nCompanies that opt to only replace technology when it breaks will go the way of Kodak, Blockbuster and Radio Shack. Today\u2019s midmarket IT leaders\u2019 primary functions include protecting company data and empowering employees with technology to get their jobs done.\nThe number of CIOs reporting directly to CEOs and company presidents continues to increase each year, further advancing IT\u2019s importance level to ensure smooth operations across the entire business.