By Stijn Viaene, professor of Management Information Systems
(Source: Data News, 07/05/2012)
- Professor at KULeuven and Vlerick Business School
- Partner at Vlerick Business School
- Deloitte Research Chair Bringing IT to Board Level
The worst thing that can happen to you as a CIO is having to report to the CFO. You hear this now and then. But is that really true? You’ll only know, of course, by looking into how that reporting decision was made. You start from the assumption that drawing a line of reporting is a deliberate choice. Unfortunately, this isn’t always the case. All too often, you see this decision dictated by a total lack of interest in, and insight into, IT management. Add to this a CFO who calculates his power simply by the number of direct reports he has under him, and the case is settled in no time.
The farther you stand from the sun, the colder it gets. In other words, when there’s a CFO between you (the CIO) and the CEO, the chance is greater that you have less influence on policy. That’s right. But suppose you report to the CEO and he or she never makes any time for you. What good is your line of reporting now? In brief, a reporting line is an important signal for understanding the role and importance of IT in a business context – but it’s certainly not the only one.
One thing is sure: the importance of reporting lines has decreased in our turbulent contemporary business world. By this, I certainly do not mean to say that managers should be relieved of their duty to make decisions. But it is true that the traditional hierarchy is gradually being complemented – and sometimes even replaced – by decision-making in flat, open network structures to give the company the manoeuvrability that it needs. More than ever before, today’s manager is busy orchestrating people and resources that are not under his direct line of report.
So, where do we stand with our relationship between CIO and CFO? To a large extent, that depends on the will of the individuals to enrich their relationship.
Enrichment of the CIO-CFO relationship occurs in conversations on various levels. First of all, of course, the two need to click on the personal level. Are both able to initiate a conversation and guide it to a positive conclusion? Then, on the level of their roles, each needs to obtain a clear picture of the other’s expectations and responsibilities. Which is often a quest, especially in turbulent times. That’s why talking and developing a common language are more important than ever. The relation between the CIO and the CFO can receive a big boost during major change programmes. We’re talking about business system projects (e.g. ERP and CPM). Once again, opportunities for a long, rich conversation – this time concerning new ways of working (together). Finally, there’s the level of business vision formulation. It’s up to the CIO and the CFO to position – and do justice to – their conversations within the overall context of the management team’s conversations. Making a significant contribution to the strategic agenda is the goal.
Even in the hiring process
Prior to recruiting a new CIO, it’s still customary to set up a discussion with the CFO. In many cases, that conversation is decisive. And not only in regard to the employer. These days, a candidate CIO is fully aware of the need for customer- and results-oriented IT management. Moreover, he is ready to give his all for the organisation. But in return, he does expect the guarantee of a meaningful mandate. And he wants to sense that unequivocally in the discussion with the CFO. Without that explicit click with the CFO in the job interview, the chances of successfully bringing in a good new CIO are very near zero. You can count on it.
As the CIO, if you are brought in to put things in order following a period of haphazard IT management, then you’d best become good buddies with the CFO. Your first job, in fact, entails getting a handle on the IT budget – and your career will rise or fall on your ability to do this. What’s being spent on IT, by whom, and how are these resources allocated? As CIO, you can use all the budgetary help you can get in an exercise in bringing the cost-to-serve to the desired to level. Cost accounting, transparent IT budgeting and strategic spending discipline are crucial. With a strong CFO at your side, you will encounter few problems establishing this necessary governance. And in such a case, reporting directly to the CFO is often an advantage.
Of course, IT management involves more than keeping systems up and running. A healthy IT portfolio and policy stimulate growth and innovation. In this context, social media, cloud computing, big data, analytics and mobile have a great deal in store for our organisations. Don’t presume that you can’t talk about these evolutions with your CFO. Indeed, not all CFOs are bean counters.
But if the CIO-CFO relationship stands in the way of this opportunity, then it’s up to the CEO to step in. Most likely, in addition to a vision, she also has some understanding of conversations and relations.