Who Should Oversee IT?
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A recent presentation on the difference between CIOs reporting to CEOs or CFOs yielded another call to arms for IT shops. |
Our recent presentation, Who's the Better IT Boss? CEO of CFO?, looked at the strategic and operational disparities Forrester Research found between IT leaders reporting to the chief executive or the top financial officer.
One of our readers immediately called for businesses to stop thinking about IT as an expense, but rather as a strategic enabler. That call to action isn't new, but it puts the CIO's reporting structure into better perspective, especially when asking whether he/she should report to the CEO or CFO.
"The role of an IT organization is NOT to generate financial reports, but to leverage the operation of the business," Regis writes. "This is so far from the responsibilities of the CFO it is scary when people consider putting the CIO under the CFO."
Regis also says there's validity in the argument for having CIOs report to finance, but he largely points to the necessity for IT chiefs to answer straight to the top.
So what do you think? Is your IT shop better off under the CEO's supervision? Or should the CFO be the boss?
(Also, for more on the CIO reporting structure, check out Temple professor Rajiv Banker's thoughts.)
Comments (9)
The job of the CIO is to align systems with the strategic direction of the organization, not just the direction of the accounting/finance group. This direction needs to come from the CEO, not the CFO. The CEO has a much larger view of the organization than the CFO does. In many cases, due to the nature of the job, the CIO has a broader view of the organization and the strategic direction than the CFO.
Posted by Wes Buxton | August 5, 2008 11:36 AM
The CIO and CFO should be in lock step when it comes to running IT. IT has and can have a significant impact to the competitive advantage, profitability and share value of any company. IT direction should be the responsibility of the CIO. But as we know, cost of that direction may have a negative or positive impact to shareholder value. The CFO should be a partner and have an equal vote when it comes to making major decisions in IT. He should be engaged early to understand financial impact of decisions that IT is looking to make.
Posted by Dan Draper | August 5, 2008 12:00 PM
The logical conclusion is that it reports to the CEO. The cost of IT is only one factor of the equation. The focus of IT needs to be directed more towards its internal customer and to the planning and direction provided by the CEO and board.
Posted by David Hedlund | August 6, 2008 1:38 PM
Having IT report to the CFO was a really bad idea 30 years ago and it is even a worse idea today. Given that the role of the CIO has come into existence, I had thought that the nonsense of reporting to the CFO would have been retired with Windows 95.
As Wes says, the job of the CIO is strategic. If this person's job is not to determine how to leverage technology for the competitive advantage of the company, then they are the "computer room manager" and not the CIO.
In an age where we are crossing the knee of the innovation curve, companies than do not leverage all types of technologies through competent organizations, led by a skilled CIO, will not be successful.
Posted by Dale Reynolds | August 6, 2008 2:00 PM
As IT has become the indispensable and critical part of any organization, and as IT has the role of meeting the business needs of any organization, it should be managed by the CEO of the organization, instead of the CFO. A budget should be allocated by the CEO for IT department for a given year. CEO should oversee the CIO's work through a portal meant for IT governance.
Posted by Ravi Sankar | August 11, 2008 7:06 AM
It is puzzling why any business organization would make the assumption that the leader of finance would have the inherent competencies to oversee the information technology group. The financials team is focused on recording business results, preparing forecasts and managing the tax position. How does IT fit into this picture?
The focus of the IT organization is to support the business's operations and leverage technology to develop competitive advantages. Reporting to the CEO is the only avenue to accomplish this objective.
Posted by Anonymous | August 11, 2008 9:16 AM
Well, IT is an independent function just like marketing, ops, finance. Does marketing report to CFO or CEO? Well, that should answer whom the IT needs to report to. Of course, to CEO. Hopefully, CEOs, nowadays, are IT savvy and understand what the CIOs are talking about.
Posted by gkb | August 11, 2008 10:17 AM
As a VP of IT and future CIO there is no bigger issue facing our future. I currently work for the CFO and I have spent over a year trying to change my reporting to the COO/CEO. The fact is CFOs are not capable or competent to manage IT/IS in 2008 or any year past 1998. Most CFO's similar to mine have no experience nor do they really care about the strategic aspects of IT/IS. They have inherited the org. structure and new CEO/COO's are not stepping up. It is well understood that managing IT as a cost center is a culture change issue and the new CEO/COO's are as much to blame as the lame duck CFO's that don't get points for changing (risk adverse). I have experience with both reporting structures and I am ready for the change to happen so we can all look back at this as the evolution of IT. CIO's need to stop taking jobs that report to the CFO, be demanding and stop perpetuating the insanity of CFO reporting. Our future depends on this becoming history.
Posted by JSK | August 11, 2008 5:13 PM
In my opinion, the CIO/CTO needs to report to the CEO. CIO/CTO are peers with CFOs and their paths cross when contemplating budget issues -- opex, capex, etc. However, the CIO/CTO role is often a combination of strategy and tactics and how monies spent on IT -- whether to develop new products, or maintain existing products, or whether to invest in a new packaged software solution are examples of decisions CIO/CTOs often have to make in conjunction with the CEO because it has a broad impact on the organization.
Posted by Raghu Bala | November 25, 2008 12:31 PM