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CIOs losing control of budgets to CFOs

Gartner study warns that IT bosses risk losing control of technology budgets if they fail to bring their departments in line with business objectives

CIOs could soon find themselves having their IT policy dictated to them by the CFO if they fail to bring spending in line with business needs.
CIOs could soon find themselves having their IT policy dictated to them by the CFO if they fail to bring spending in line with business needs.

IT risks losing control of budgets if CIOs continue failing to heed warnings from board colleagues to bring technology investments in line with business objectives. That is the key finding of a report by Gartner into the growing role of the chief financial officer in organisation's IT divisions.

The survey, which was conducted by the research agency and two financial management organisations, found that in the prior year, CFOs had authorised 26% of all IT related spending - an increase from 15% the previous year. By authorising spending, it means that those CFOs are playing an active role in shaping IT policy and direction

It warned that the trend would continue - with CIOs finding themselves with less and less say in spending decisions - unless they move IT purchasing decisions closer to the business.

Figures show that within 42% of enterprises, the IT department - including the CIO - report to the CFO, while in another 33% of organisations, IT reports to the CEO directly. The author of the report, John Van Decker, an analyst at Gartner, warned that the number of IT departments reporting to the CFO was likely to continue rising if CIOs continue failing to make IT fit the businesses' needs, rather than using it as a test bed for new technologies and concepts.

The study paints a bleak picture for cloud computing and virtualisation vendors. The report stated that CFOs' attention is focused in the direction of improving business processes, efficiency and gaining business insight through the use of IT, often at the expense of new concepts and unproven technologies such as cloud computing and virtualisation.

Gartner warned that CIOs shouldn't bury their heads in the sand and attempt to shut out the CFO from IT decisions. Instead, it recommends that they should communicate with their CFO and ensure that they have a strong understanding of all technologies available to them, rather than leaving it up to them to find out.

It warned that if CIO do that, then it should be no surprise that the CFO develops a bias towards only technologies that have a financial benefit.

"The 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," Van Decker said.

CIOs however, have voiced their concerns at the news, warning that putting the CFO in charge of IT would irreparably damage the department's ability to provide businesses with the strength and agility to compete in today's modern business environment.

Arun Tewary, vice president of IS and CIO at Emirates Flight Catering described the increasing influence of the CFO in IT as shortsighted, and warned that enterprises that placed IT under the remit of the CFO were guilty of poor management. "In better managed organisations, IT is a core function, directly under the CEO and top management, with an independent standing at board level. This independence provides IT with the required strength, vision, and strategy to become an equal stake holder in the business."

He added that without that equal stake in the business decisions, enterprises could not hold IT responsible for failed implementations, as more than ever, it is necessary for IT have a presence in any business decision from the outset.