CFO role in IT investment increasing
- 20 May, 2012 22:00
The chief financial officer (CFO) is increasingly becoming a top technology investment decision maker — if not the leading decision maker — in many organisations, according to a joint study by Gartner and Financial Executives Research Foundation (FERF). The study shows the CFO's role in technology decision making has increased in the last year with 44 percent of CFOs stating that their influence over IT investment has increased since 2010, while 47 percent say that it has remained the same and just 9 percent of those surveyed believe that their influence has decreased.
The survey was conducted between October 2011 and February 2012, and it included 255 CFO respondents.
"The CFO and CIO are well-positioned to work together at generating business value from enterprise IT investments," says John Van Decker, research vice president at Gartner. "However, this performance is often not achieved because of poor perceptions of IT, a parochial CFO or CIO perspective, or simply a failure to invest in the CFO-CIO relationship."
The survey results showed that there are many ways that CFOs are involved in making IT investment decisions.
Forty one percent said that they were the actual leader of a group responsible for IT investment, whereas another 41 percent were part of a group responsible for IT decision making, 16 percent provide advice and one percent said they were the sole decision maker.
Since the large majority was involved in group decision making about IT, engaging the CFO is clearly a critical issue.
"CFOs need to explain to CIOs the IT capabilities needed by the finance function," says Bill Sinnett, director of research at FERF. "There is an opportunity for them to form a powerful alliance that generates more value for the enterprise. The CFO and CIO are well-positioned to work together at generating superior performance from enterprise IT investments. However, this performance is often not achieved because of poor perceptions of IT, a parochial CFO or CIO perspective, or simply a failure to invest in the CFO-CIO relationship."
One reason CFOs are important stakeholders is that they control IT funding. Although CFOs don't strictly decide who receives the money, they are powerful influencers and strict enforcers of policies and decisions. CFOs often have greater access to, and involvement with, senior business governance groups, and usually have strong influence and credibility with the CEO and board.
IT spending is currently very healthy from the responses in the study, and if there is a business improvement that can be made from increasing investments in IT spending, many CFOs will consider approval.
When it comes to areas that CFOs would like to invest in, the study showed that business intelligence, analytics and performance management are at the top of the list. They identified the top business process area that needs technology investment as the ability to facilitate analysis and decision making (57 percent) closely followed by collaboration and knowledge management (52 percent).
In addition, the analysts identified four major technology trends that are on the CFO's radar and will drive technology planning, investment and usage in 2012 and beyond.
These are the nexus of social, mobile, cloud and information. Enterprise organisations are being challenged to adapt as these technologies, and the data that result from their adoption and deployment internally to the enterprise and externally with customers, expands exponentially.
With the exception of social media, which scored low in terms of technology initiatives, mobile, cloud (including software as a service [SaaS]) and information are priorities with CFOs.