CIO, CFO, IT and Procuring the Cloud
For as long as there has been high technology use in business, there has been a struggle between the enterprise CFO and CIO for the power to make IT purchase decisions. It isn’t rocket science… the reasons for the challenge are fairly straightforward. The CFO wants to know what the expected return on the investment will be. The CIO, on the other hand, recognizes that there is rarely a straight line to be drawn between IT expenditures and near-term positive business outcomes. Sometimes it takes a while to fully realize the benefits of an IT project… and sometimes it’s necessary to spend the money just to maintain status quo.
While there may be indicators that the CFO’s influence in the enterprise is extending into areas where the CIO traditionally ruled (due – at least in part – to SaaS and the Cloud) there are also indicators that the role of the CIO is evolving rather than losing relevance.
A survey performed in 2011 by Gartner and Financial Executives International revealed a number of interesting results which indicated that the balance of IT procurement power was shifting within the enterprise. 344 senior financial executives were surveyed, and they revealed that:
- in 45% of organizations, the CFO makes or leads IT investment strategy
- about 75% of surveyed CFOs said they have little confidence in their own IT departments
A CFO.com article on the subject also mentioned a KPMG study from April 2011, in which it was reported that “73% of CFOs identified IT as the greatest risk to finance meeting its objectives”.
With the emergence of “cloud” computing solutions and the plethora of application and service options now available to businesses, some businesses have concluded that “the CFO is better equipped for the cloud world”. The belief is that the CFO is more attuned to the processes of vendor management and contract term and condition negotiations, which are primary areas of focus when looking to obtain outsourced IT and application services. The process of comparing pricing and service level agreements is more of a business process than a technology process, placing it squarely in the realm of the CFO.
The real issue here isn’t a struggle for power and influence; it’s a change in business priorities fueled by changes in technology and service models. IT and the role of the CIO must focus on innovation and improvement of processes and profitability through efficiencies gained with technology, not on defragging hard drives and running software updates. Brocade.com discusses this evolution of roles and focus with enterprise CIOs and CFOs in the release entitled The CIO Is Dead. Long Live the CIO. The Cloud Redefines the Role of the CIO
“ … the CIO role will evolve and policy enforcement, technology evangelism and mediation between business units and their services providers will become the key responsibilities for the CIO by 2020…. And rather than being replaced by the CFO in this shift in IT provisioning, two-thirds of respondents predicted that the roles of COO and CIO will merge as technology continues to become more operationally vital. http://newsroom.brocade.com/press-releases/the-cio-is-dead-long-live-the-cio-the-cloud-rede-nasdaq-brcd-977455
Who understands better than the internal IT department the time-consuming and frustrating nature of maintaining user environments and applications? Who in the organization has the technical understanding, coupled with a direct business understanding, sufficient to explore new ways of approaching various process or workflow problems? I think most business IT managers would agree that addressing issues that have a potential to radically improve the way a business operates is much more challenging and interesting than selecting the right make and model of server.