Who Holds the IT Pursestrings?

If IT is to truly embrace the mandate of running like a business, that means IT leaders must update their approach and implement strategies to make the business management of technology pervasive across the enterprise.

And what wil be the consequences if they don’t?

These days, IT has become integrated with virtually all aspects of the enterprise. So if CIOs neglect to adopt a more holistic approach, could their role become obsolete?  Will CFOs eventually assume exclusive responsibility for when, where and how IT budgets are administered?

A new research note from Gartner suggests that CFOs are flexing their muscle in new ways, exerting a progressively more powerful role in making technology investments. In fact, the data showed that in many firms, IT investments now are authorized exclusively by the CFO, with little to no CIO input.

In a recent CIO.com article, Roy Harris reports that Gartner recently polled 344 executives – 95 percent of them senior financial executives, including 66 percent who are enterprise CFOs.  The survey results, compiled in the "Technology Issues for Financial Executives: 2011 Annual Report,” reveal that:

  • More than one-quarter (26 percent) of IT investments in the past year have been authorized by CFOs alone –that’s up from 18 percent of CFO-alone authority in last year's survey. What’s more, in about half (51 percent) of cases, the decision is being made either by the CFO alone, or with CFO-CIO collaboration –that’s also up from 45 percent last year.
  • Survey participants said the CIO now makes the investment call alone a mere 5 percent of the time –which is down significantly from 11 percent in 2010.
  • For 42 percent of the firms polled, IT organizations now report directly to the CFO, with 33 percent reporting directly to the CEO.

In perhaps the most remarkable result of all, Gartner found that less than half (only 47 percent) of those surveyed viewed IT as being strategic.  What’s more, less than one-third (30 percent) of those polled believe IT is providing clear business benefits, and only 32 percent said they see the CIO as a strategic partner.

We've seen firsthand how customers are redefining traditional roles and reporting structures as they overhaul their IT departments to meet changing business demands. For example, the “VP of IT Finance” seems to be gaining in popularity, as is the dual role of CIO-CFO.

Clearly, IT responsibilities are expanding, and if CIOs don’t want their control taken away, they are going to have to evolve accordingly. CIOs need to become more empowered – not less. They need to get closer to the business – not farther away. Technology Business Management represents one strategy for CIOs to gain relevancy with the business and show how the matrix of cost, value, and quality can be leveraged for the good of the business at large.