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CFOs increase influence in IT

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The CFO is increasingly becoming a top technology investment decision-maker — if not the leading decision-maker — in many organisations, according to a joint study by Gartner and the Financial Executives Research Foundation (FERF).The study shows that the CFO’s role in technology decision-making has increased in the last year with 44% of CFOs stating that their influence over IT investment has increased since 2010, while 47% say that it has remained the same and just 9% of those surveyed believe that their influence has decreased.

The survey of CFOs, which is in its fourth year, is designed to gather perceptions from financial executives about the economic environment, the CFO’s role in technology and their IT investment priorities. The survey was conducted between October 2011 and February 2012, and it included 255 CFO respondents.

“The CFO and CIO are well-positioned to work together at generating business value from enterprise IT investments,” says John van Decker, research vice-president at Gartner. “However, this performance is often not achieved because of poor perceptions of IT, a parochial CFO or CIO perspective, or simply a failure to invest in the CFO-CIO relationship.

“This year’s results show that, in most organisations, the CFO and CIO work together to finance IT and provide information that supports enterprise processes,” Van Decker adds. “But there is also an opportunity for them to form a powerful alliance that generates more value for the organisation.”

The survey results showed that there are many ways that CFOs are involved in making IT investment decisions. Forty one per cent said that they were the actual leader of a group responsible for IT investment, whereas another 41% were part of a group responsible for IT decision-making, 16% provide advice and 1% said they were the sole decision-maker. Since the large majority was involved in group decision-making about IT, engaging the CFO is clearly a critical issue.

One reason CFOs are important stakeholders is that they control IT funding. Although CFOs don’t strictly decide who receives the money, they are powerful influencers and strict enforcers of policies and decisions. CFOs often have greater access to, and involvement with, senior business governance groups, and usually have strong influence and credibility with the CEO and board.

IT spending is currently very healthy from the responses in the study, and if there is a business improvement that can be made from increasing investments in IT spending, many CFOs will consider approval. From an IT operating expense perspective, 39% of CFOs see a similar expense budget for IT in 2012 from 2010, while 44% forecast an increase. For IT capital appropriations, 32% foresee status quo on spending, while 48% are expecting an increase. When asked how companies view spending in 2013 versus 2012, 51% see the same IT operating expense levels, and 41% forecast similar IT capital spending while 44% see an increase in capital spending in 2013 over 2012.

When it comes to areas that CFOs would like to invest in, the study showed that business intelligence, analytics and performance management are at the top of the list. CFOs clearly recognise the need for improved technology support for these key business processes and identified the top business process area that needs technology investment as the ability to facilitate analysis and decision-making (57%) closely followed by collaboration and knowledge management (52%).

In addition, the analysts identified four major technology trends that are on the CFO’s radar and will drive technology planning, investment and usage in 2012 and beyond.

These are the nexus of social, mobile, cloud and information. Enterprise organisations are being challenged to adapt as these technologies, and the data that result from their adoption and deployment internally to the enterprise and externally with customers, expands exponentially. With the exception of social media, which scored low in terms of technology initiatives, mobile, cloud (including software as a service [SaaS]) and information are priorities with CFOs.

“CFOs are beginning to look at technologies that can span BI and applications and deliver applications through mobile access and via SaaS,” says Van Decker. “While these nexus capabilities are a concern more in 2013, IT organisations must communicate how more effective business platforms can be leveraged to deliver better architectures for business applications that are top of mind to the CFO.”