CIOs, CFOs and the Chain of Command

Ann All
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Is the CIO role at risk of being marginalized by the CFO? Some folks certainly seem to think so.


A few weeks ago IT Business Edge contributor Don Tennant discussed hearing a user testimonial presentation for Lawson Software's cloud offering given by a CFO rather than a CIO. Don wrote that it seemed "rather odd that this CFO was being asked by the ERP vendor if he had the buy-in of IT for all of this -- it just seemed like it should have been the other way around."


So did the CFO, Kevin Ellsworth of Scott County, Minn., bypass IT to implement the software? As I wrote in March, these kinds of "rogue" deployments appear to be growing, particularly with the ready availability of software-as-a-service and other cloud-based options.


When Don spoke with the CFO, Ellsworth said that while he had "strong ownership of the Lawson application from the business side," IT was "a strong partner." Ellsworth also mentioned the county was considering merging IT, finance and human resources into a single unit. He further described IT as "an enabler, joined at the hip with me to help make things happen." That doesn't exactly sound like Ellsworth went behind IT's back to get the Lawson software or wants IT out of the picture.


This came back to me while I was reading a piece by Thomas Wailgum titled "CFOs to CIOs: You Work for Me Now." In it, Wailgum cites a Gartner/Financial Executives Research Foundation (FERF) study in which 42 percent of respondents said their organizations' IT departments report to the CFO, with others reporting to the CEO (33 percent), the COO (16 percent), a chief administrative officer (2 percent) and "other" officers (7 percent). Forty-one percent of the finance executives responding to the survey said they were the main decision-maker for IT investments, while 34 percent said they were among the key recommending/sponsoring executives.


Another data point: 53 percent of CFOs said they would like to move to an arrangement where CIOs report into CFOs. Hmmm, so almost all of the organizations where the CIO doesn't already report to the CFO think that's the way the reporting structure should work?


Wailgum offers two interpretations of this data. Either "CFOs are overstating their own technological importance" or in a somewhat more Machiavellian vein, "many chief bean counters are trying to both centralize and expand their corporate authority, using the IT function and its 21st-century business influence to bolster their own power base inside the executive suite."


Sure, CFOs may be overstating their own importance. They're not the only folks prone to that kind of overstatement. And I suppose some CFOs are just power-hungry. There's at least some precedent for CIO roles being eliminated and entirely taken over by finance. But maybe some CIOs find themselves falling under the purview of CFOs if they aren't able to provide a true picture of IT costs and benefits. It's up to CIOs to clearly illustrate the IT benefits organizations can expect for their money.


At the recent Midmarket CIO Forum in Orlando, both IT Business Edge contributor Rob Enderle and I met several CIOs who went out of their ways to befriend their CFOs and were glad they did. Wrote Rob:

If you can find ways to make the CFO's job easier, that person is more likely to help you when you need it and less likely to hang your budget out to dry. If your goals align, the CFO is more likely to see the advantage of spending on IT, and will focus cuts on other areas. Given how hard it is for the CFO to get real numbers and how critical IT is to generating those numbers, an alliance can pay strong dividends, including cutting stress from both jobs.

One of the CIOs I spoke to said his CFO often had his back and was able to help him use valuable IT resources on strategic projects that would help achieve business goals, running interference in some cases so he didn't spend as much time with midlevel executives who wanted IT at their beck and call. Perhaps this is what Ellsworth meant when he told Don Tennant he saw himself as "joined at the hip [with IT] to make things happen." Maybe I'm just naive, but that's how I'd like to think it could work. Shortly after the Midmarket CIO event, I wrote a post about how CIOs could make CFOs a partner instead of an adversary.

Add Comment      Leave a comment on this blog post
Oct 22, 2010 2:42 AM ITPro ITPro  says:

Company's who put the CIO position and the IT department under direct control of the CFO do not value IT as part of the business. Successful companies see IT as just another business unit where they can enable the company to have a higher competitive advantage through the use of technology. Most CFO's are worried about the bottom line and they will most often than not want things done for as cheap as possible instead of the right way, then complain when the results are not what they want. IT decisions should be based on business needs and they both departments should work together in unison.

Aug 15, 2016 11:51 PM Grey Grey  says: in response to ITPro
For a business to grow, it is important to focus on every sector and assist on every department whether it is finance, IT, HR,etc. CIO hold the information system while CFO hold the finance system. It would be unfair to say that the only one should have the command over the business. The company will survive if the CFO and CIO are working together. Reply

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