IT Strategy is in the CFO's Hands

By CIO Update Staff

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The CFO is becoming the top IT decision maker in many organizations, according to a joint survey conducted by Gartner and Financial Executives Research Foundation (FERF). According to the annual study, 2010 Gartner FEI Technology Study: The CFO as Technology Influencer, more IT organizations report to the CFO than the CEO or any other executive. Forty-two percent of IT organizations surveyed said they reported to the CFO, and 53 percent of CFOs said that they would like to move to this reporting arrangement. FERF is the non-profit 501(c)(3) research affiliate of Financial Executives International (FEI).

"Where the CIO should report is a question as old as the CIO role itself," said John Van Decker, research vice president at Gartner, in a statement. "CFO reporting can lead to success if the CFO has a deep understanding of IT's value."

The joint study found that 42 percent of organizations said their IT organization 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 was fairly uniform across companies of all sizes, although the percentages reporting to the CEO in large organizations were higher, though the groups still reported to the CFO in greater percentages.

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. In addition, 20 percent of CFOs have a minor role by providing some input, and in only 5 percent of cases does the CFO not participate in IT decision making.

"In most organizations, the CFO and CIO work together daily to finance IT and provide information that supports financial processes, but there is also an opportunity for them to form a powerful alliance that generates more value for the enterprise," said Bill Sinnett, director of research at FERF, in a statement. "The CFO and CIO are well-positioned to work together at generating superior performance from the enterprise."

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.

Van Decker points out 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.

About the Study

The 2010 Gartner/FERF technology study received 482 responses to approximately 50 questions that covered senior finance managers' views of technology. The survey was conducted from late October 2009 through January 2010. More than 74 percent of the respondents were senior financial executives, including CFOs and controllers.