Do CIOs have buying power?

Most CIOs cannot authorise IT spending on their own, according to a survey of finance leaders by IT analyst company Gartner.

The survey, conducted by the Financial Executives Research Foundation (FERF) and the Committee of Finance and IT (CFIT), polled 344 respondents, 95% of whom were senior financial executives. They reported that only 5% of CIOs can authorise IT investments alone; the vast majority need approval from the chief financial officer.

According to FERF research director Bill Sinnett, the influence of the CFO over IT investment is growing. “This year’s results show an increasing enterprise requirement for greater financial control of technology initiatives in the firm,” he remarked.

In many cases, the CFO has ultimate authority over the entire IT department, the survey found. In companies with less than $50 million in revenue, 47% of IT departments report to the CFO, 58% in companies with revenue between $50 million and $250 million, and 46% in companies with $1 billion or more in revenue.

The report’s authors see this as a positive development. Sinnett remarked that it reflects “better alignment between the technology and the strategic direction of the enterprise, with the CFO primarily leading this coordination”, he said.

CFOs can, of course, be trusted to analyse the financial component of technology investments – if not them, then who else? But do they necessarily have the technological understanding to protect the organisation’s long-term interests in their IT-related decisions? It is now the CIO’s responsibility to make sure they can, Gartner concludes.

“[CFOs’] influence in technology investments demonstrates the need for companies to ensure that their CFO is educated on technology,” commented John Van Decker, research vice president at Gartner, “and underscores just how critical it is that the CIO and CFO have a common understanding of how to leverage enterprise technology.”

The research findings may not be surprising to some, but they underline the fact that, in the post-recessionary era, an understanding of finance has become the most important asset for an IT leader to possess.

Chris Potts, author and CIO mentor, says the findings underline the need for IT executives to focus on the value that they contribute to the business

CIOs need to take this as yet more evidence that they are being urged up the value chain. Their influence over strategy in the boardroom depends increasingly on their leadership in value creation and investment, and less on spending, sourcing and delivery. 

The perfect storm of IT consumerisation and cloud computing has radically changed the principles on which IT-related investments need to be made. CIOs have their work cut out ensuring that their executive colleagues understand and exploit the changes that are happening. In comparison, who authorises IT spending is neither here nor there.

Nick Kirkland, CEO of IT executive networking group CIO Connect, says the report chimes with the experience of its members

I’m really not surprised by the headline findings of the research, and I don’t think they’re as sensational as they might first appear. They certainly fit with what we’re talking to our members about. If you think about it, most major IT investment decisions are related to specific business projects, so it’s only right that decisions are being made collaboratively, involving heads of business units and CFOs, as well as CIOs.

This can only have a positive effect on the business, as IT investment should be closely aligned to clear objectives, with all stakeholders involved from the outset.

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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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