The good folks over at Gartner and the Financial Executives Research Foundation have just completed another one of those big studies. What they found is that in companies that have less than $50M in revenue, 47% of their CIOs report to the company’s CFO. In firms that have $1B or more in revenue, 46% of CIOs report to the CFO. Looks like the IT department had better spend some time finding out what the CFO wants from the CIO…
Things That The CFO May Not Understand
Under this new definition of information technology, when you are a CIO who finds himself / herself reporting in to a CFO, you’re going to have to take the time to understand how they see the world. Remember, they don’t know as much about the IT sector as you do and yet they are now ultimately responsible for delivering on the benefits of IT.
The first thing that you need to understand is that your CFO is going to be looking for a trusted advisor when it comes to all things IT. The CFO still has their financial responsibilities on top of their new IT responsibilities. What they need is someone to basically tell them what they need to do in terms of IT work. If you play your cards right, then this person could be you.
A CFO’s worldview generally comes down to trying to understand the ROI associated with every dollar that the company spends. What you need to do as a CIO is to help them to understand that when it comes to IT, this view may no longer be correct. In IT we do a lot of experiments and we have a habit of piloting new projects. It’s entirely possible that these activities, as important as they are, may not have a positive ROI. It’s your job to make sure that the CFO understands this.
What The CFO Needs To Understand
Reporting into a CFO can actually benefit an IT department. CFOs are very focused on areas where IT departments have not been traditionally strong: processes, efficiency, and costs. What this means is that when the CFO is running the show, every IT expense will be looked at in terms of what it can produce for the company.
Another area where CFOs can help IT departments is in forecasting. What a CFO does a lot of is forecasting for the company. Using these skills to look at IT investment cases can help to ensure that only those IT projects that have a good chance of long term success will get funded.
Your role as CIO is going to be to educate your CFO on all things having to do with IT. Specifically, your CFO is going to have to know enough about IT in order to be able to balance the risk of making an investment in an IT project against not making an investment in an IT project.
What All Of This Means For You
In close to 50% of the firms out there, the CIO does not report to the CEO. Rather the CIO reports to the CFO. What this means for CIOs is that we had better spend some time understanding what CFOs are looking for.
The key thing to understand is that CFOs are not “IT guys”. This means that they are going to need some help in understanding the importance of information technology. CFOs need to be taught that not every IT dollar has an ROI associated with it. CFOs are also going to have to understand that there are two sides to IT: a back office and a customer facing side.
Yes, we’d all like to have the CIO be seen as a “big boy” and get a seat at the CFOs table. However, for the foreseeable future it appears as though there is a good chance that many CIOs will be reporting to the CFO. If you find yourself in this position, then use these tips to show the CFO how to manage an IT department.
Question For You: What do you think is the best way to get a CFO to spend money on an IT project that does not have a positive ROI but which must be done?
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What We’ll Be Talking About Next Time
What kind of CIO would you like to be: reactive or proactive? The definition of information technology tells us that we’d like to the proactive type of CIO. We’d like to sit around thinking about strategic next steps. However, often times life doesn’t work that way: we suddenly get issues thrown our way all the time. Here are two questions that you need to come up with answers for right now in order to prevent yourself from being surprised later on.