CIO vs. CFO: Can’t We All Just Get Along?

by drjim on June 20, 2012

Image Credit CIOs and CFOs shouldn't solve problems this way

CIOs and CFOs shouldn't solve problems this way

I’ve got some bad news for you. CIOs are unhappy. It turns out that a lot of CIOs are now reporting into the company’s CFO instead of its CEO. This means that the CFO is in charge and the CIO feels that he or she is not. Things can’t go on this way. What can be done to fix this problem?

The Problem

So who’s really in charge of the IT department? The folks over at Gartner have done a survey and they’ve discovered that 42% of IT organizations report to the CFO. If you work for a smaller firm, this number soars to 60%. Isn’t something wrong here? In the definition of information technology aren’t CIOs supposed to report directly to the CEO?

What this means is that CIOs feel that they are not being heard. A poll by CIO magazine of CIOs working in the IT sector revealed that only a third of CIOs feel that they are “a trusted partner or business peer”. 31% believe that they are only a “valued service provider”. Clearly the rest have an even lower view of their position in the company.

When CIOs feel this way, reporting into the CFO instead of the CEO can cause even more tension. Some people refer to this situation as the schizophrenic CIO-CFO relationship where CIOs just ask for more funding and the CFO just says no.

One of the big reasons that there is such a disconnect between the CIO and the CFO is because they both see the company differently. The CFO sees the company through a language of numbers while the CIO sees the company through a language of transactions.

The Solution

Given that this CIO to CFO reporting structure exists in many companies, what’s a CIO to do? One of the first things that CIOs need to realize is that with the arrival of cloud computing their need for ever increasing IT budgets may be at an end. Now they are going to be able to focus less on building out a network of more boxes and more on providing value to the rest of the company.

The future is looking bright for IT – the IT department is going to play a big role in the future success of the company. In order to make the most of this opportunity, the CIO and the CFO need to have a truly transparent relationship. This also means that they are going to have to spend a fair amount of time talking.

There is a great deal of complexity to running an enterprise IT department. CFOs may feel that they have a good understanding of what is going on; however, more often than not they don’t. In order to bridge this gap, the CIO is going to have to change.

CIOs are going to need to understand how the CFO sees the world. The CFO by necessity exists in a lean world where every expenditure needs to be associated with an ROI. In order to become a valuable asset to the CFO the CIO needs to adapt to this world and clearly spell out the need and benefit of every IT project that the company is going to undertake.

What All Of This Means For You

In the new world order, many CIOs are reporting directly to the company’s CFO. If there is not good communication between these two executives, then there’s going to be problems. Considering the growing importance of information technology, this can’t be allowed to happen.

Sources of conflict can come when the CIO keeps asking for more money and the CFO in placed in the difficult position of always having to say “no”. Instead, what needs to happen is the CIO and the CFO need to create a partnership that will allow them to work towards a set of shared goals.

If you find yourself in a position where you need to work closely with the company’s CFO, then you are the one who is going to have change. Stop focusing on asking for additional funding and start searching for ways that you can make the CFO be more successful!

– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World IT Department Leadership Skills™

Question For You: What do you think the #1 thing that a CIO can do to improve his or her relationship with the CFO is?

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What We’ll Be Talking About Next Time

No CIO wants to have a project fail. That’s why when it comes time to do something about older IT systems, replace or renew them, most CIOs have to take time to think about what they really want to do. This is the kind of project that is going to require both the IT department and the rest of the business to work together. What you may not know is that its eventual success or failure rides on decisions that you make before the project even starts…

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