Is It So Bad for the CIO to Report to the CFO?

The hierarchy inside a company reflects its values and priorities. It can be a sensitive topic for CIOs. Who your boss is — CEO, CFO, COO, someone else — can color the way other executives view you and your staff.

Conventional wisdom says that the CIO must report to the CEO or risk losing stature, authority and access to the power center of the company. Reporting to the CFO is bad, the theory goes, because IT is then viewed as a nonstrategic operations group where the governing principle is saving money.

That’s not always true, argues Dawn Costello, senior vice president of global IT strategy and portfolio management at Wyndham Vacation Ownership. When a CIO reports to finance, the CFO is forced to understand IT because assessment of his own performance will be based in part on IT’s success, Costello says. “The CFO becomes a supporter.”

Tom Nealon has reported to various senior executives in his 29-year career, during which he led IT for J.C. Penney, Southwest Airlines and Frito-Lay, and been a partner at The Feld Group consultancy. He says titles don’t matter, relationships do. No reporting structure automatically diminishes IT, says Nealon, who joins the CIO Hall of Fame this year. “What’s more important is whether or not the CIO is able to fully engage with the senior team.”

Dave Weick, CIO of McDonald’s and another Hall of Fame honoree, reports to the CFO. Fellow CIO Hall of Fame inductee Tim Theriault of Walgreens reports to the CEO and says that “it’s a mistake” for CIOs not to. Where the CIO sits “sends a message about the importance of technology to the company,” he says.

We’ll probably never see an end to the debate simply because reporting structure will never be uniform across companies. Corporate culture, history, personalities, tenure and many other factors determine who reports where. Each CIO will make his own path.

Follow Senior Editor Kim S. Nash on Twitter: @knash99.