IT Architectures Still Controlled By Financial Officers

The power of the chief financial officer (CFO) over IT investments could be riddled with bias and there is a need for them to have a better understanding of technology, according to the results of a survey from Gartner, the Financial Executives Research Foundation (FERF) and the Committee of Finance & IT of Financial Executives International (CFIT of FEI).

Of all 344 respondents in the annual study, 41 percent believed that IT is appropriately funded for 2011 and 31 percent said that IT has the technological capability to move the firm forward.

The bad news is that 70 percent of the bean counters do not believe that IT truly fulfils its mission by providing business benefits. This is probably why only 32 percent of CFOs said they see the CIO as a strategic partner. The survey also showed that 42 percent of IT departments report directly to the CFO, and 33 percent report directly to the CEO.

CFO Perspective Of IT

Just under half of the respondents thought of IT as being strategic, while around a quarter said IT fulfils what is asked of it. Eight percent viewed IT as a key contributor to the enterprise’s competitive position and a mere four percent saw it as transformational.

“Given some of this dissatisfaction, CFOs are taking a more active role in controlling a greater share of the organisation’s IT investments. Due to the increased involvement of CFOs and senior financial executives, organisations must make it a priority to better educate decision makers,” said Bill Sinnett, director of research at FERF.

In this active role, CFOs are making IT investments according to their own guidelines and 72 percent said they will “invest where they see a competitive advantage driven by IT”.

Financial applications figure strongly in the minds of the CFOs – no surprise there. Business intelligence (BI) is the favourite initiative while enterprise business applications, such as enterprise resource planning (ERP) and integrated financial management solutions, follow on as investment priorities.

“This year’s results show an increasing enterprise requirement for greater financial control of technology initiatives in the firm, as well as better alignment between the technology and the strategic direction of the enterprise, with the CFO primarily leading this coordination,” Sinnett said.

When asked how to ensure that the relationship between the business and IT is successful and effective, the responses pointed to a clear ownership of the project (38 percent), the business case for the project (37 percent) and project management (36 percent). This showed that investment success was viewed more highly than technology prowess.

“This high level of reporting to the CFO, as well as their influence in technology investments, demonstrates the need for companies to ensure that their CFO is educated on technology, and underscores just how critical it is that the CIO and CFO have a common understanding on how to leverage enterprise technology,” said John Van Decker, research vice president at Gartner.

The Gartner report CFOs’ Priorities for Technology Identified in the 2011 Gartner FEI Technology Study can be purchased through Gartner’s Website. There is also a Webinar, Exploring CFO Priorities for 2011.

Eric Doyle, ChannelBiz

Eric is a veteran British tech journalist, currently editing ChannelBiz for NetMediaEurope. With expertise in security, the channel, and Britain's startup culture, through his TechBritannia initiative

View Comments

  • This is a common management problem. First, allowing a CFO to make any business decision is simply foolish. They typically know nothing of the actually needs of the business or what is required to make it work. They should only be advisers in regard to money, cash flow, etc.

    Our CFO recently cost our small hospital over $200,000 because he was"making the vendor sharpen his pencil" and we missed a critical deadline. The purchase he held up was for about $70k and he managed to save only about $1,000 total. This is how CFOs run businesses.

    CEOs needs to place limits on CFO's power and keep them from holding the companies hostage. When CFOs are trained in business management then maybe they should be allowed to make business decisions. Because the majority of CFOs are reluctant to make decisions in the first place they place delays in the business that can be far more than costly.

    Why anyone would ever let a bean-counter make any business decision is beyond my understanding.

  • Unfortunately these findings seem to be spot on. Working as a contractor for multiple companies, are either the main financial employee or one of the divisional accountants. We are also seeing a lot more of a crackdown on IT spending due to the recession last year.

    Unfortunately it can be hard for a CFO to realize all of the implications a decision will have, or that sometimes an easy fix isn't possible. We often find ourselves butting heads with them to try and drive home the point that sometimes spending more cash or time up front will save more in the long run, be it through uptime, security, or better management/planning of resources. This is of course goes directly against their own job directive, doubly so if you're a contractor.

    CFOs need to start realizing that the IT world isn't as cut and dry as they would like it, and that sometimes the best solution isn't the fastest. In the end, they need to respect what their IT department does for them and realize that we deal with a business aspect that can get quite convoluted, especially if we aren't kept in the loop on resource or management decisions.

  • I am IT support/administration for a small outpatient imaging facility that is corporately owned ergo governed locally by the typical corporate staffing tree. We recently completed an IT project with hardware/software purchase and deployment. I went through the trouble of doing the duties of a project manager, documenting the entire process from start to finish including minor details and placed said document on a share that the CFO and CIO could open any time they wished and ask me any questions they have about it.

    Occasionally the CFO, during the 3-4 months during development, would call me and inquire about what various things are and why its taking so long. One response I gave was over this person's head enough they proceeded to then imply I must be fabricating everything I was documenting. To make matters worse, the CIO is not the preferred IT credentialed person, so to assist adequately during the process as an intermediary is difficult.

    I find that you can attempt to explain the processes, inner-workings, nuts and bolts to a CFO but they did not go to school for IT. They are a CPA or Finance person. You will instead get the hand wringing and crooked stares.

    What can further complicate things is if the significant other/spouse of a CFO is in the IT industry...

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