by Thomas Wailgum

CFOs to CIOs: You Work for Me Now

May 11, 2010
Business IT AlignmentEnterprise ApplicationsIT Leadership

New research shows that many CFOs are making a power play to take more control of IT. That's not good news for CIOs, but you can fight the trend.

Who’s the top IT decision-maker inside companies today: The CIO, right? Ahhh, no. The CEO? Guess again. The CTO? Nope.

Try the CFO.

(Just letting that one sink in a bit.)

According to new survey research from Gartner and Financial Executives Research Foundation (FERF), CFOs are “increasingly becoming the top technology investment decision maker in many organizations,” notes the announcement. In total, 482 senior finance managers responded to the 2010 Gartner/FERF technology study.

The study revealed that 42 percent of organizations reported that their IT department (and, presumably, the CIO) reports to the CFO, 33 percent to the CEO, 16 percent to the COO, 2 percent to a chief administrative officer, and 7 percent to other officers. (This stands in marked contrast to CIO magazine’s 2010 State of the CIO data, which found that 43 percent of CIOs report to CEOs, and just 19 percent report to CFOs. Why the difference in data? Gartner/FERF surveyed CFOs and finance execs, and we surveyed CIOs, yet one wouldn’t think people would confuse, or lie about, their reporting relationships. Do CFOs figure such a result would only help in their power grab?)

In addition, the Gartner/FERF report sheds light on how CFOs view their roles and organizational oversight responsibilities today:

In 41 percent of organizations, the senior financial executives (mostly CFOs) who responded to the survey viewed themselves as being the main decision maker for IT investments. This response occurred in most situations where IT reports to the CFO, but it also occurred in other reporting models. In another 34 percent, CFOs are among the key recommending/sponsoring executives. Thus, in 75 percent of firms, the CFO plays a vital role in determining IT investment.

One interpretation of the survey data is that many chief bean counters are trying to both centralize and expand their corporate authority, using the IT function and its 21st-century business influence to bolster their own power base inside the executive suite. This would not be a dumb move for CFOs, though it seems like a major setback for CIOs trying to raise their profile in the executive suite.

Another interpretation of these results, however, is that CFOs are overstating their own technological importance. I know how to use my BlackBerry, therefore I’m an IT expert!

CIOs Want to Report to the CEO

In April, I wrote an article for that examined the decades-long reporting relationships of CIOs and asked the question: Why Is the CFO Still Boss of IT? CIOs and IT executives, in a LinkedIn Forum discussion that began last year, had engaged in a protracted and insightful debate about the modern-day CIO reporting structure.

In sum, the CIOs and IT executives who left more than 200 comments felt they deserved to be reporting into the CEO today—dues had been paid, business competence had been shown and they were RSVPing their seat at the proverbial table, if they hadn’t already been seated yet.

But as it turns out, CFOs may have other ideas about that.

The 2010 Gartner/FERF survey found that 53 percent of CFOs said that they would like to move to an arrangement where CIOs report into CFOs.

For those CIOs pining to get out from under the CFO’s thumb and report into the CEO, the survey report offers pedestrian, dispiriting strategies for how CIOs should better work with their CFOs.

Here’s one that has the right sentiment, but just the wrong executive: “CIOs must understand the impact their CFOs have on technology decisions in their organizations,” states the report, “and ensure that they are providing the CFO with the appropriate understanding of technology, as well as communicating the business value that can be achieved.”

If CIOs are desperate to report to the CEO, shouldn’t they be providing the CEO with this information directly? CIOs everywhere know the answer to that question already.

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