by Roy Harris

A Shift to CFOs in Calling Tech Shots

Jul 07, 20114 mins
CIOIT Leadership

Corporate finance chiefs indicate that they have an increasingly more powerful role in making technology investments -- in many cases supplanting the role of the CIO -- new research is showing.

Corporate finance chiefs indicate that they have an increasingly more powerful role in making technology investments — in many cases supplanting the role of the CIO — new research is showing.

CFOs to CIOs: You Work for Me Now

CFO: IT’s New Boss?

Indeed, 26% of IT investments in the past year have been authorized by CFOs alone, up from 18% of CFO-alone authority in the prior year’s survey. And in 51% of cases, the decision is being made either by the CFO alone, or by the CFO in a collaboration with the CIO, a percentage that is up from 45% the prior year. However, the chief information officer makes the investment call alone only 5% of the time, down from 11% in 2010, the study shows.

The new research also shows that 42% of IT organizations now report directly to the CFO, with 33% reporting directly to the CEO. In what the report called an unfortunate result, “[o]nly 47% of those surveyed viewed IT as being strategic.”

The Gartner-sponsored survey of 344 executives — 95% of them senior financial executives, including 66% who are enterprise CFOs — is titled “Technology Issues for Financial Executives: 2011 Annual Report.” The report is in its third year as a Gartner-Financial Executives International collaboration, and the 13th year as an FEI project involving its members. This year’s Gartner project was done in conjunction with FEI’s Financial Executives Research Foundation, and its Committee of Finance & IT.

More Weight to the Evidence

The research adds more weight to previous reports that CFOs are playing an increasingly active role in shaping IT direction. But few reports seem so focused on the changing CFO-CIO relationship.

Comments from the Gartner report’s author, John Van Decker, have a harsh ring for CIOs. But they certainly reinforce the rising importance of the finance chief.

“This high level of reporting to the CFO, as well as their influence in technology investments, demonstrates the need for companies to ensure that their CFO is educated on technology, and underscores just how critical it is that the CIO and CFO have a common understanding on how to leverage enterprise technology,” writes Van Decker, who is vice president-corporate performance management and financial managing systems for Gartner.

As for CIOs, they increasingly have become less focused on business intelligence, and seem more interested in projects that advance cloud computing and virtualization, he writes. Meanwhile, the IT priorities of CFOs are geared more toward improving business processes, efficiency and using IT to gain competitive insight.

CIOs Must ‘Get Closer to Business’

“There is a message in the study that IT needs to get much closer to business. If they (CIOs) don’t do that I think what you are going to see is more of the control being taken away,” writes Van Decker.

Other CIO warnings in the report’s findings are the indication that only 30% of respondents believe that IT is providing clear business benefits, and that “only 32% of CFOs said they see the CIO as a strategic partner.” That final percentage seems to track with the survey result that 47% of respondents see IT as strategic in the first place.

This Gartner survey is being made available only to people registering with Gartner.

Van Decker does note that the concentration of CFOs among respondents gives extraordinary weight to their own biases. And the author is actually far from pessimistic about the role of the CIO’s job, although he says it could diminish even more if CIOs fail to work more collaboratively with the CFO and others in their businesses.

“If the [CIO] role doesn’t evolve to be more business oriented, “business areas will go off and do their own thing and involve IT at a minimum,” he writes.

Read these reports on the study from CFOworld sister publications Computerworld and Computerworld UK.