Who should have a greater influence over IT: CFO or CIO?

by Sohini Bagchi    Mar 04, 2013

cfocio

The role of Chief Financial Officers (CFOs), just like any other C-suites, have undergone a sea change in the ever-changing business landscape. A recent Forrester study reveals that CFOs are increasingly influencing the IT spending in organizations with 40 per cent stating that CFOs will continue to gain a greater influence over IT in the next one year. In this context, a question that arises is: Will this trend affect their equation with Chief Information Officers (CIOs), who are generally the vanguards of IT in the organizations? At the same time, who should have a greater influence over IT: the CIO or the CFO?

The changing role
If we reel back a few years from now, we would see that most IT managers reported to the CFOs. However, this trend was gradually changing with CIOs assuming greater autonomy and responsibilities in business and many of them now directly report to the CEO. As far as IT usage is concerned, evolution of newer technologies and regulations are compelling CFOs to leverage IT to extend their capacity and skill-sets based on the changing business requirement, just like the CIO is expected to be business-savvy and work towards aligning IT with business objectives. When it comes to influencing IT decision making, the Forrester study notes that the IT service providers are changing the way they interact with their clients. For example, those vendors specializing in newer technologies like predictive analytics, big data, cloud computing and mobile, often prefer interacting with the top business decision makers than the IT team. Moreover, the Forrester study observes that most buyers also believe in cutting costs in their IT services spend, and in all these the finance department and the CFO often have a greater role in decision making.

In a similar survey last year, Forrester revealed that 35 per cent respondents stated that CFOs are influencing the IT decisions. From that perspective there has been a marginal rise of 5 per cent, which may not be a threat to a CIO, but a matter to ponder.

Working in collaboration
In such a scenario, when it comes to decision making, experts believe the CFO and CIO should form a strong partnership that can generate greater business value. “CFOs are responsible to bring about an increase in ROI in all assets of the enterprise including, people, accounts, customers, data and brand, and they act as risk mitigators beyond the financial risk today. Therefore, they are also expected to drive innovation by using information from the available data,” says P K Mallick, CFO, New Kolkata International Development (NKID). He believes it is not about overpowering the CIOs or anybody in business. This demands a renewed bonding between the CFO and CIO along with other board members, who are expected to discuss processes, analytics and other technical capabilities in the enterprise.

Agrees Sanjeev Kumar, Group CIO & President – Business Excellence of Adhunik Group. He believes that CIOs who have successfully demonstrated their abilities and drive business results are always a part of the board and have a say on the IT budget and spending. In fact, he believes that in any successful enterprise, the C-suites work in collaboration to move their organizations forward.

Even a Gartner study conducted a few months ago noted CFOs as powerful influencers of policies and decisions, as they also control IT funding to an extent. The research firm also recommended that in the current the scenario, both the CFO and the CIO should form a strong partnership that can generate a greater business value. This in turn will help them in making IT and other business decisions more strategically.