By Natasha Lomas, 10 October 2008 16:28
NEWS
In a few short years CIOs are going to find themselves closer than ever before to the person holding the IT department's purse strings: as the global economic crisis bites, analyst house Gartner says it's vital CIOs and CFOs learn to trust each other - for the good of the business.
Data from Gartner's Executive Programs (EXP) from 2002 to 2008 shows a gradual upward trend in the proportion of CIOs reporting to the head of finance. Meanwhile, increasing numbers of CIOs also believe they will be reporting to the CFO in three years' time.
Almost a quarter (23 per cent) of CIOs currently report to the head of finance, compared to more than a third (38 per cent) reporting to the CEO. If the trend continues, by 2013, more CIOs will be reporting to the CFO than the CEO, according to Gartner.
Dave Aron, vice president and research director for Gartner EXP, said that although CIOs have been told to sell the business importance of IT to finance for some time, CIOs' and CFOs' objectives remain misaligned.
"The CIO and CFO have to devote time to aligning the economic architecture and the enterprise architecture of the business. In order for CFOs and CIOs to ally closely, they must come to a shared view of value. The most powerful tools for achieving this alignment are portfolio management and enterprise architecture," he said in a statement.
Gartner says a strong CIO-CFO team can boost business value in a variety of ways - for instance, having the CFO's ear could give a CIO more boardroom influence and thus help encourage the exec team to consider more strategic IT investments.
Reporting to the CFO can also be more attractive if IT is an immature state; if the CEO is very outward facing or has too many direct reports; or if the CFO has a broad scope which includes a deep understanding of IT's value, says the analyst.
However there are certain circumstances where reporting to the CFO could make life more difficult for heads of IT.
According to the analyst, reporting to the CFO is less attractive for a CIO if IT-intensive transformation is critical to the success of the business; if the CFO is focused on finances and therefore less strategic; or if IT is relatively stable and mature.
Aron said: "Where IT fundamentals are strong and the CIO is looking to add the next level of value, CFO reporting often creates a challenge in that CIOs must work harder to break out of the IT box," highlighting that almost half (45 per cent) of CFO-reporting CIOs have leadership roles outside IT, compared to 63 per cent of CEO-reporting IT chiefs.
The analyst added that CFO-reporting CIOs spend one day less per month with the board and senior executives than CEO-reporting CIOs.
Aron added: "The message here is not that CFO-reporting CIOs are doomed to failure. Rather, it is that these CIOs need a focused plan to break out of the box, which should include influencing the CFO to be more IT-savvy and to understand the CIO's full capabilities as a contributor."
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1. Colin Beveridge
After many years observing and participating in endless debates about the purpose and position of the CIO/ IT Director, I have concluded that nobody needs a Chief Information Officer.
The role has been completely misplaced from the outset and is the fundamental cause of a subsequent dilemma in too many enterprises.
This view may appear disconcerting to many Silicon readers but I believe my analysis is well-founded and I will be pursuing this topic in Fighting the Trillion Dollar Bonfire.