The influence by chief financial officers (CFOs) in IT is growing: CFOs alone have authorised 26% of all IT investments, while CIOs alone have authorised only 5%, according to a recent joint study by Gartner, Financial Executives Research Foundation (FERF) and the Committee of Finance & IT (CFIT) of Financial Executives International (FEI). The survey also showed that 42% of IT organisations report directly to the CFO, and 33% of IT organisations report to the CEO.
The survey of CFOs, which is in its third year, is designed to gather perceptions from financial executives about technology, key trends and planned improvements to operations. The Gartner/FERF technology study, conducted from October 2010 through January 2011, included 344 respondents who were qualified in providing a perspective on technology deployment within the organisation. Sixty-six per cent of the respondents were CFOs, 9% were business unit CFOs, and 95% could be considered senior financial executives.
The survey results varied by the size of the company. For example, in companies with less than $50-million in revenue, 47% of IT departments report to the CFO, while 58% of companies with revenue of more than $50-million and less than $250-million have IT departments that report to the CFO, and 46% of companies with $1-billion or more in revenue have IT reporting to the CFO.
"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 organisation technology," says John van Decker, research vice-president at Gartner.
"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 organisation, with the CFO primarily leading this coordination," says Bill Sinnett, director of research at FERF.
Senior financial executives were 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%), the business case for the project (37%) and the project management (36%). Business partnering and sound project management continue to have more of an impact on IT investment success than technology prowess.
The survey also showed that senior financial executives expect IT spending to recover conservatively in 2011, with 38 per cent of respondents saying that they do not expect this growth to reach the level experienced before the recession in 2008: 40% see the level of growth consistent with 2010; just 6% expect the economy to rebound this year beyond 2008 levels.
When it comes to how CFOs are making IT investments, and which guidelines they used to guide investments, 72% of firms said that they will invest where they see a competitive advantage driven by IT. Business intelligence (BI) is the top technology initiative from the perspective of the senior financial executive. For a combined 65% of choices, BI ranked as the technology with the highest demand, while 46% ranked enterprise business applications, such as enterprise resource planning (ERP) and integrated financial management solutions, as investment priorities. When viewed within the larger scope of operations' infrastructure, however, business applications (30%) were seen as more important than BI (23%) in 2011.
Of all organisations in the study, 41% believed that IT is appropriately funded for 2011, and 31% said that IT has the technological capability to move the firm forward. However, only 30% said that IT truly fulfils its mission, meaning that 70% do not believe that IT is providing business benefits. Furthermore, only 32% of CFOs said they see the CIO as a strategic partner.
Only 47% of survey respondents viewed IT as being strategic, while 28% said IT fulfils what is asked of it. Thirty-five percent of organisations see IT as being a strategic driver of business performance; 8% view IT as a key contributor to the organisation's competitive position; and 4% see it as transformational.
"In terms of enterprise technology, organisations need to focus on better enabling business processes, led by technology initiatives," says Sinnett. "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."
"IT organisations must understand the CFO's views of technology investment decisions and must work toward developing a relationship with the CFO that resembles a business partnership," says Van Decker. "This will enable the business to become more agile. This flexibility will help organisations select best practices that could make business processes work better, thereby providing better business insight."