May 13 2010   6:25PM GMT

CIO role under thumb of CFO?

Linda Tucci Linda Tucci Profile: Linda Tucci


“Where the CIO should report is a question as old as the CIO role itself,” says John Van Decker, analyst with Gartner Inc.

Shoot, it’s a stale question even for a reporter who has been covering CIO careers for five years.

But data on the topic, whether from Gartner or Forrester Research or the Society for Information Management (SIM), usually creates a stir and invariably is interpreted as a measure of the CIO role at a company.

The “good” answer for CIO careers, in my experience, is that they report to the CEO. After all, IT is pervasive in the enterprise, and if deployed effectively, a strategic asset. How many other executives under the CEO have the kind of depth and breadth of understanding of the way the business actually runs? Actually, the CFO does.

The nemesis is back — at least, according to a recent survey from Gartner and the Financial Executives’ Research Foundation (FERF). Among a respondent pool of 482 senior financial executives, 42% said their IT organization reported to the CFO, while 33% said that organization reported to the CEO. In addition, 53% of the CFOS said they would like CIOs to start reporting to them.

Here’s the kicker: In 41% of organizations, the senior financial executives (mostly CFOs) who responded to the survey viewed themselves as being the main decision maker for IT investments (my italics). So, what’s a CIO to do?

Well, according to the experts at Gartner and FERF, the CIO and CFO have an opportunity “to form a powerful alliance that generates more value for the enterprise,” but not without a whole lot of soul-searching, it seems, on the part of the CIO. Here’s an excerpt from the press release:

However, this performance is often not achieved because of poor perceptions of IT, a parochial CFO or CIO perspective, or a failure to invest in the CFO-CIO relationship. CIOs must understand the impact their CFOs have on technology decisions in their organizations, 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. …IT must interpret its relative strengths and weaknesses as opportunities for improvement, and must work with the finance organization to improve these perceptions. Establishing career paths for project managers, including a path into the project management organization, from which they can provide valuable training and coaching of apprentice project managers; and investment in project portfolio management solutions are just some of the ways that the IT organization can improve its position with the CFO.

Obviously these surveys have to be taken with a grain of salt. Survey results on this loaded question tend to vary depending on the survey pool. In this one, for example, the responses come from CFOs, the very people most inclined to inflate the power of their position at their organizations. (Technology costs a lot of money.) When SIM surveyed its mostly CIO members last year on this very question, 49% of CIOs said they reported to the CEO, and only 25% said they reported to the CFO.

I don’t know that it is such a bad thing for the CFO to have the final say on IT investments. The argument was made to me recently — by no less than veteran CIO Tom Pyke, formerly with the U.S. Department of Energy and the Department of Commerce — that there are good reasons to keep the financial decisions and strategic decisions about IT separate.

But if I were a CIO reading this, what would stick in my craw is the scolding assumption that the burden to improve the relationship is all on the IT staff.

2  Comments on this Post

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  • KimBatson
    Linda, I would agree with your thoughts. It is my opinion that this particular survey is perhaps a reflection of two things: 1) The recession and companies' tightening their belts accordingly and perhaps moving some IT organizations under the CFO for now. 2) The data, however (as you mention), came from Finance execs., albeit with Gartner involved, so there may well be some empire-building here. (Hence different results from SIM members last year.) All in all, CIOs in my experience have more flexibility to be innovative when reporting directly to CEOs and COOs and not underneath CFOs (who, of course, often simply view IT as a cost-center). So we'll see what future surveys reveal...but all in all, I wouldn't be too concerned about this one, as you allude to. Kim Batson, The CIO Coach Twitter: @cio_coach
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  • Mgagas
    Hi Linda, Your insights are interesting. I think the strategic and financial perspectives are synergistic, for example, portfolio management approaches to prioritizing, deploying technology is a useful methodology that serves both perspectives. I've found that CFO and financial executives, like IT executives, come from two schools. One that earns their seat at the table in running the business, formulating strategic direction, executing, and those that run their function well. When the latter is in the drivers seat, regardless of their functional discipline, all is right with the world. Thoughts for a Friday. Nice report! Regards
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