CFO now chief IT decision-maker

Set-up succeeds if CFO has deep understanding of ICT value, says Gartner.

The chief financial officer (CFO) is now becoming the top decision-maker when it comes to IT investments, according to a recent study. An annual survey by Gartner and Financial Executives Research Foundation (FERF) revealed that some IT heads report to the CFO more than to the chief executive officer (CEO), and that CFOs prefer this.

The worldwide study involving 482 responses revealed that 42 per cent of IT organisations surveyed said their chief information officers (CIOs) report to the CFO, and 53 per cent of CFOs said they would like to move to this reporting arrangement.

The CIO's role in organisations has long been the subject of debates ever since organisations realised what IT can do for them. Some argue that the CIO needs to have the ear of the CEOs, who are seen as the key decision-maker in organisations. However, with IT investments also involving funds, many also believe that CIOs should gain the confidence of the one who holds the purse strings.

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

Only 33 per cent of the CIOs surveyed report to the CEO, 16 per cent to the chief operating officer (COO), two per cent to a chief administrative officer and seven per cent to other officers. The results are true for companies of all sizes, although the percentages reporting to the CEO in large organisations were higher, and the groups still reported to the CFO in greater percentages, a joint press statement said.

CFOs who participated in the study believed they should be the "main" decision-maker for IT investments, the statement read. This is true both for those CFOs who have CIOs reporting to them and for those CFOs in organisations where they have a different set-up. In another 34 per cent, CFOs are among the key recommending/sponsoring executives. Thus, in 75 per cent of firms, the CFO plays a vital role in determining IT investment. In addition, 20 per cent of CFOs have a minor role by providing some input, and in only five per cent of cases does the CFO not participate in IT decision-making.

"In most organisations, 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 Financial Executives Research Foundation. "The CFO and CIO are well-positioned to work together at generating superior performance from the enterprise."

Unfortunately, this may not always be the case. The study suggested that CIOs should be good at explaining to the CFOs the importance of IT investments in their organisation, most especially its business value.

Van Decker suggested the CIO should get valuable training in project management--working with project managers is one example--so that the CIO can better explain the importance of IT to the new decision-maker.

The survey was conducted from late October 2009 through January 2010 with more than 74 per cent of the respondents being senior financial executives, including CFOs and controllers. MIS Asia