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July 6, 2011

CFOs have more say than CIOs on IT investment: Gartner/FERF study

CFOs have authorised 26% of all IT investments compared to only 5% by CIOs

By CBR Staff Writer

Despite chief information officers (CIOs) having more knowledge of the IT infrastructure of an organisation than chief financial officers (CFOs), the latter have more say to an organisation’s IT investment.

CFOs alone have authorised 26% of all IT investments compared to only 5% of investment authorised by CIOs alone, according to a recent joint study by firm Gartner, and Financial Executives Research Foundation (FERF) and the Committee of Finance & IT of Financial Executives International.

The survey also showed that 42% of IT organisations report directly to the CFO, and 33% of IT organisations are reporting to the CEO.

Forty-seven per cent of IT departments in companies with less than $50m in revenue report to the CFO, the study which included 344 top executives said.

In companies with revenue of more than $50m and less than $250m, 58% of IT departments report to the CFO, while 46% of companies with $1bn or more in revenue have IT reporting to the CFO.

In response to the query on how senior executives ensure that the relationship between the business and IT is successful and effective, 38% pointed towards a clear ownership of the project, 37% towards business case for the project and 36% for project management.

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The study revealed that business partnering and sound project management continue to have more of an impact on IT investment success than technology prowess.

The survey also showed that senior financial executives expect IT spending to recover conservatively in 2011, with 38% of respondents saying that they do not expect this growth to reach the level experienced before the recession in 2008.

When it comes to how CFOs are making IT investments, and which guidelines they used to guide investments, 72% of firms said that they will invest where they see a competitive advantage driven by IT.

According to the study, business intelligence (BI) is the top technology initiative from the perspective of the senior financial executive.

For a combined 65% of choices, BI ranked as the technology with the highest demand, while 46% ranked enterprise business applications, such as enterprise resource planning (ERP) and integrated financial management solutions, as investment priorities.

When viewed within the larger scope of operations’ infrastructure, however, business applications (30%) were seen as more important than BI (23%) in 2011.

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

However, 70% do not believe that IT is providing business benefits, while only 32% of CFOs said they see the CIO as a strategic partner.

Thirty-five percent of organisations see IT as being a strategic driver of business performance, 8% view IT as a key contributor to the enterprise’s competitive position, and 4% see it as transformational, the study found.

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