Why CFOs don’t respect IT – and how you can change that

At more and more companies, the CFO has direct control over IT. But unfortunately, recent research shows most CFOs have a low opinion of the IT groups working under them.

That’s the message from a recent study conducted jointly by Financial Executives International, the Financial Executives Research Foundation and tech research firm Gartner.

At the 344 organizations that were studied, 42% of IT departments report directly to the CFO. That number is expected to rise in the future.

At 26% of the organizations, the CFO has complete authority to approve IT investments — that’s up from 18% in 2010. Just 5% of CIOs have that kind of power. For many other companies, investments are authorized by a joint committee made up of IT and Finance people.

Put simply, at more and more companies, the CFO is in charge when it comes to IT. The problem: Most CFOs don’t think IT is helping the business succeed.

Only 30% of them said they believe their IT department is truly fulfilling its mission in providing business benefits. And just 32% of CFOs said they view the CIO as a strategic partner.

Some other troubling results:

  1. Just 35% of CFOs see IT as being a strategic driver of business performance
  2. 28% said IT fulfills what’s asked of it, and
  3. 8% view IT as a key contributor to the organization’s competitive position.

So how can IT managers better fulfill the CFO’s expectations? When asked what they look for in IT projects, the top three answers from CFOs were:

  1. Ownership of the project and its impact on the business — i.e., IT takes responsibility for the project and understands how it fits into the organization’s greater plans
  2. Business case — the project will give the organization a competitive edge, and
  3. Project management — the investment is planned properly and carried out efficiently.

In other words, CFOs need to see that IT projects will help the business and that the benefits will outweigh the costs of the implementation.

The projects many IT departments are focusing on now (virtualization, cloud computing, etc.) most likely meet those criteria — but as this study shows, IT may not be properly communicating the benefits of those initiatives.

When talking about potential projects with the CFO — and anyone else involved with approving funding — it’s important to emphasize the competitive advantage they’ll give the company.

Gartner recommends IT managers reach out to CFOs and be as clear as possible when explaining the benefits of proposals. The important thing is for IT to be proactive in building the relationship — if the CFO doesn’t view IT as a strategic partner, it’s up to IT to change that perspective.

For more tips on gaining your CFO’s buy-in, read our whitepaper on 7 Statements Your CFO or CEO Needs to Hear to Increase IT Spending.

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  • Charles

    Wouldn’t work for a company where the CFO had ANYTHING to do with IT, other than rubber stamp my initiatives. Next to lawyers I’ve never seen a group of individuals less knowledgeable about technology than financial people.

    They see all IT as an expense, have no concept of how technology has ROI beyond dollar for dollar, but also has value in morale and productivity increases.

    Most CFO’s in most companies are bullies and to many CIO, CTO’s for some reason are afraid of them, and that’s why an authority level where they should report ONLY to the CEO or COO is rapidly dwindling away.

  • Tom Costello

    I find it irritating that the same talking points from this study appear in every article published (by CFO focused publications, CEO sites, board member oriented sites, IT e-zines, and published by misc news outlets), and all end with instructions on how the CIO can do a better job communicating TO the CFO.

    Where are the instructions to the CFO about how they can become better educated on how to leverage IT and “partner” with the CIO to maintain that critical balance of responsiveness, agility, security, workforce capability, and financial responsibility?

    Perhaps Gartner et al should include questions in the 2012 survey that probe how much time the CFO’s spend meeting with their CIO’s on a monthly basis? What percentage of that time do they spend on strategic, tactical, and general IT education. I would be willing to bet it is 80%+ tactical, 20%- strategic, and 0% educational). If the study were to ask their CIO counterpart the same question, I’m sure the figures will NOT line up.

    The issue isn’t reporting structure, ROI, or any other tactical issue – it is a fundamental lack of understanding by CFO’s of “how” IT can be structured to respond to various needs of the enterprise, and the lack of willingness on the part of the CFO to invest the time in getting sufficient details to properly understand it. The complexities of IT do not roll up nicely to a summary statement like a financial report… you can not have a “fly by overview” of your IT shop and make good decisions.

    The most interesting comment in all 3 years of this study is that 53% of CFO’s would “prefer” an arrangement where the CIO reports to the CFO and the CFO makes decisions. I would suggest 100% of those CFO’s make time to immerse themselves in a discussion with their CIO on “how” it all actually works… and from there, a real partnership can begin.