IT Architectures Still Controlled By Financial Officers

The power of the chief financial officer (CFO) over IT investments could be riddled with bias and there is a need for them to have a better understanding of technology, according to the results of a survey from Gartner, the Financial Executives Research Foundation (FERF) and the Committee of Finance & IT of Financial Executives International (CFIT of FEI).

Of all 344 respondents in the annual study, 41 percent believed that IT is appropriately funded for 2011 and 31 percent said that IT has the technological capability to move the firm forward.

The bad news is that 70 percent of the bean counters do not believe that IT truly fulfils its mission by providing business benefits. This is probably why only 32 percent of CFOs said they see the CIO as a strategic partner. The survey also showed that 42 percent of IT departments report directly to the CFO, and 33 percent report directly to the CEO.

CFO Perspective Of IT

Just under half of the respondents thought of IT as being strategic, while around a quarter said IT fulfils what is asked of it. Eight percent viewed IT as a key contributor to the enterprise’s competitive position and a mere four percent saw it as transformational.

“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,” said Bill Sinnett, director of research at FERF.

In this active role, CFOs are making IT investments according to their own guidelines and 72 percent said they will “invest where they see a competitive advantage driven by IT”.

Financial applications figure strongly in the minds of the CFOs – no surprise there. Business intelligence (BI) is the favourite initiative while enterprise business applications, such as enterprise resource planning (ERP) and integrated financial management solutions, follow on as investment priorities.

“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 enterprise, with the CFO primarily leading this coordination,” Sinnett said.

When 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 percent), the business case for the project (37 percent) and project management (36 percent). This showed that investment success was viewed more highly than technology prowess.

“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 enterprise technology,” said John Van Decker, research vice president at Gartner.

The Gartner report CFOs’ Priorities for Technology Identified in the 2011 Gartner FEI Technology Study can be purchased through Gartner’s Website. There is also a Webinar, Exploring CFO Priorities for 2011.