Gartner EXP says building a powerful alliance between the CFO and CIO will deliver stronger business performance
Building stronger CFO-CIO relations to be discussed at upcoming of Gartner Symposium/ITxpo 2008, 3-7 November, Cannes, France
(PresseBox) (Egham, UK, )As businesses face difficult decisions ahead due to the economic crisis, it's crucial for the chief financial officer (CFO) and the chief information officer (CIO) to build a powerful alliance to increase business value, according to Gartner Executive Programs (EXP).
"CIOs have been told for years that they must demonstrate the business value of IT, but the problem is much deeper because of misaligned mindsets between the CIO and CFO," said Dave Aron, vice president and research director for Gartner EXP. "The CIO and CFO have to devote time to aligning the economic architecture and the enterprise architecture of the business. In order for CFOs and CIOs to ally closely, they must come to a shared view of value. The most powerful tools for achieving this alignment are portfolio management and enterprise architecture."
Creating an alliance between the CFO and CIO based on trust generates better business value. Specific ways in which a strong CFO-CIO alliance can increase business value include:
- Greater executive influence - In situations where the CFO has greater access, credibility and/or influence at the executive committee and board level, the CFO may be able to shape demand for more impactful IT investments and generally influence those governance groups to make superior decisions about IT.
- More flexible collaboration - When the CFO and CIO have established trust, they are often willing and able to give each other the benefit of the doubt, as well as some flexibility. This can mitigate the problems inherent in fixed, formal planning, and reduce the burden of communication.
- More strategic planning - When the CFO and CIO have achieved a common understanding of the business model, business priorities and each other's role, time together can be spent on genuine strategic planning to maximise the benefits of information and IT, rather than more-tactical, operational issues.
In 2008, 23 per cent of CIOs report to the CFO, while 38 per cent report to the CEO. Gartner EXP data from 2002 to 2008 shows a very gradual upward trend in the proportion of CIOs reporting to the CFO, as well as CIOs' expectation of reporting to the CFO in three years' time. If this trend continues, by 2013 it would result in more CIOs reporting to CFOs than to CEOs.
"CIOs' three-year expectations remain distant from the reality, based on their belief that reporting is driven by IT performance," Mr Aron said. "In fact, there are multiple drivers of the CIO's reporting line, including the focus of the CEO and perceptions of IT's role. Our survey shows that cost focus is not a dominant driver of whether the CIO reports to the CFO; it is a similar business priority for CFO-reporting and CEO-reporting CIOs."
In general, reporting to the CFO is less attractive if IT-intensive transformation is critical to the success of the organisation, if the CFO is focused on finances (and therefore less strategic), or if IT is relatively stable and mature. CFO reporting is more attractive if IT is in an immature state, if the CEO is very outward facing (sometimes the case in the public sector) or has too many direct reports, or if the CFO has a broad scope that includes a deep understanding of IT's value.
"Where IT fundamentals are strong and the CIO is looking to add the next level of value, CFO reporting often creates a challenge in that CIOs must work harder to break out of the IT box," Mr Aron said. "There are two clear pieces of evidence for this. First, only 45 per cent of CFO-reporting CIOs have leadership roles outside of IT, compared with 63 per cent of CEO-reporting CIOs. Second, CFO-reporting CIOs spend one day less per month with the board and senior executives than do CEO-reporting CIOs."
"The message here is not that CFO-reporting CIOs are doomed to failure," Mr Aron said. "Rather, it is that these CIOs need a focused plan to break out of the box, which should include influencing the CFO to be more IT-savvy and to understand the CIO's full capabilities as a contributor."
Mr Aron will provide more-detailed analysis on the CFO-CIO alliance at the upcoming Gartner Symposium/ITxpo 2008, taking place on 3-7 November, Cannes, France. Gartner Symposium/ITxpo is the IT industry's largest and most strategic conference, providing business leaders with a look at the future of IT. More than 3,000 senior business and IT strategists will gather for the insights, tools and solutions they need to ensure their IT initiatives are key contributors to and drivers of their enterprise's success. Gartner's annual Symposium/ITxpo events are key components of attendees' annual planning efforts. They rely on Gartner Symposium/ITxpo to gain insight into how their organisations can use IT to address business challenges and improve operational efficiency. Additional information is available at www.gartner.com/...
Members of Gartner EXP can access the report "Building a Powerful Alliance With Your CFO." The report examines the potential for a more powerful alliance that drives enterprise performance. The report explains how CIOs can evolve their relationships with CFOs to generate the most success for the organisation, and for the CFO and CIO. The report also provides case studies that show clear examples of well-functioning operational relationships.
About Gartner EXP
Gartner Executive Programs (EXP) is a membership-based organization of more than 3,600 CIOs worldwide. Members benefit from the convenience of a single source of knowledge, one-to-one counsel, personalized service, the shared knowledge of the world's largest community of CIOs, and the assurance of Gartner objectivity and insight. Additional information about Gartner EXP can be found on the Gartner Web site at www.gartner.com/exp.
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