Is the CIO Being Sidelined By the CFO?

Don Tennant

If you're a CIO or other IT executive with technology decision-making responsibilities, hopefully you haven't already been sidelined by your CFO. But be aware that a lot of your peers have been, and your days as the go-to person for decisions on which IT vendor to sign, and what technology option to adopt, may be numbered.


That reminder was one of my takeaways from ERP vendor Lawson Software's 2010 Conference and User Exchange (CUE) this week. As part of a major announcement about its foray into cloud services, Lawson trotted out a user from Scott County, Minn., which is an early adopter of Lawson's cloud offering. The user supplying the well-choreographed testimonial was Kevin Ellsworth, Scott County's CFO.


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Ellsworth joined Lawson CEO Harry Debes on stage for the opening keynote, and dutifully stuck to the prepared script. After Ellsworth raved about what a great move it was to adopt Lawson's cloud offering, Debes asked him an interesting question:


"Was it a difficult conversation with your IT folks? Did it take a while for them to get comfortable with the idea?"


Ellsworth responded that it was easy for IT to see the benefits of cloud computing, and that his CIO was totally on board.


It struck me as 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. I met up with Ellsworth later in the day and asked him why he was the one on stage talking about the cloud project, and not his CIO. His response:


That's a good question. Probably because I established the relationship with Lawson first. I have the strongest relationship with them right now. I feel like I have strong ownership of the Lawson application from the business side. IT is a strong partner in that, and we view ourselves as partners.


Ellsworth went on to explain that that partnership hasn't been everything it could be, and that one option under consideration is to merge IT, finance and HR so they can be centrally managed:


One thing that the Lawson implementation taught us is that we don't communicate and work together as much as we should, or could. It doesn't mean we weren't successful-we were. But we could have been more successful. One of the activities we're going through now is looking at whether we should merge into a single unit, and have IT, finance and human resources all funnel up through one central point; or are we still going to be collaborative partners. It's very threatening, in many ways, for some of the folks involved. My view is that IT needs to be at the strategic table because they're an enabler, joined at the hip with me to help make things happen.


Now, your organization may not go to that extreme, but you shouldn't be surprised if your CFO begins to take a much higher profile in managing the relationship with IT vendors. In fact, last fall Gartner issued a report in which it advised IT vendors to target the CFO and business unit heads:

Gartner recommends that technology and service providers plan their 2010 marketing campaigns, sales and service engagements with clearer value propositions aimed at the chief financial officer (CFO) and strategic business unit (SBU) leaders and with account teams composed and trained to execute in a changed sales environment. "This deep and prolonged recession has the potential to create a new market environment with stronger spheres of financial and business influence in many industries' IT buying centers," said [Gartner research director Kenneth] Brant. "Vendors should develop and/or expand financial models for project justification and sales training on selling to the financial buyer and business leader."

As more vendors follow Gartner's advice, CIOs are likely to be increasingly marginalized in the purchasing decision process. (In fact, you should be sure to check out a post by Mike Vizard over on our CTO Edge site about how vendors are using close relationships with LOB managers as a form of extortion against IT.) It will be interesting to see what impact that will have on the ongoing quest to align IT with the business, and the CIO's emergence as a business leader rather than a technology guru.

Add Comment      Leave a comment on this blog post
Apr 27, 2010 1:29 AM Sarat Varanasi Sarat Varanasi  says:

Great article. I think there are 2 aspects to this - a) Lawson having a CFO present on cloud technologies is an interesting scenario b) For many years now, IT purchasing decisions for new technologies have been done by the CFO. I am not sure if this means CIO is being sidelined. CIO's organization identifies and enables the technology discussion/selection and the CFO makes the final call on the price. This might be a common practice when CIO reports into a CFO.

Apr 27, 2010 1:48 AM it123 it123  says:

For a long time the CIO and CTO have forgotten of IT needs and roles. They have became CFO's assistants rather than IT leaders.

It seems that the CFO does not need them anymore. Sad but true.

Apr 27, 2010 11:58 AM Stephen Wolfe Stephen Wolfe  says:

Interesting, in that lately ('lately' being the past few years) I haven't seen any CIOs I would describe as technology gurus.

May 5, 2010 11:19 AM user1506913 user1506913  says:

In our Italian branch office the CIO is already reporting to CFO... so you may guess who takes decisions... Such scenario is not unusual in Italy, reagardless of IT attitude of CIO.

May 13, 2010 5:50 AM Pete Pete  says:

The CFO roe has, rightly, become more strategic in recent years. Having said that, the role is very much about managing assets - not just cash - and as such the CEO still retains the wider role


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