The Cloud

CFO vs. CIO: Endgame in the Cloud

Why the war between finance and IT chiefs may be winding down – in the CFO's favor.
David RosenbaumJune 28, 2011

A May survey of 344 senior financial executives revealed that in 45% of organizations, the CFO “makes or leads IT investment strategy.” According to the study, by Gartner and Financial Executives International, this represents a trend toward growing CFO IT leadership — driven, perhaps, by the fact that about 75% of the surveyed CFOs said they have little confidence in their own IT department.

This is hardly the first time CFOs have expressed their frustrations with IT and, by extension, with CIOs. An April KPMG study reported that 73% of CFOs identified IT as the greatest risk to finance meeting its objectives. One could find scores of similar studies if one chose. But the decades-old war between CFOs and CIOs may be coming to a close — in finance’s favor — thanks to the cloud.

Hyatt Hotels CIO Michael Blake believes CFOs are simply better equipped for the cloud world. In Blake’s view, ordering up services and computing power through third-party providers puts an emphasis on vendor management, which means “negotiating terms and conditions,” he says, a practice “better located in the CFO’s skill set” than the CIO’s.

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What one is doing, says Blake, when choosing a cloud vendor or subscribing to a software-as-a-service application is comparing price and service-level agreements, thereby making a business rather than a technology decision. And this comes from a CIO, albeit one who, as the former vice president of IT finance at Kaiser Permanente and director of IT finance for Sears, has long had close ties to the finance function.

The shift of IT decision-making responsibility from IT to finance is even more vividly embodied in smaller businesses. When Kim DeWitt, CFO of Elyxir Liquor Distribution, with annual revenues of just under $50 million, decided she needed to automate her accounts-payable processes, she didn’t turn to her CIO (she doesn’t have one), nor did she hire a consultant. Instead, she Googled “AP automation.” DeWitt identified five potential providers, compared costs and functionalities, spoke to other CFOs, and reviewed her chosen provider’s security. She drove the contract negotiations “with a final signoff from my CEO,” she says.

DeWitt will roll out her automated AP system (AvidXchange) in the next two weeks. Hyatt, meanwhile, went live with Microsoft Business Productivity Online Suite, a collaboration platform, last week. According to Blake, the rollout went astonishingly smoothly, thanks in good part to IT’s prep work in making sure Hyatt’s Active Directory (which is analogous to an internal phone book of computer addresses) was up-to-date and “cleaned up.”

So, says Blake, “I’m not saying the CIO role will disappear.”

On the other hand, he’s not saying it won’t.