IT: Hold on to Your Wallet!

Are chief information officers ruining CFOs' budgets?
Craig SchneiderNovember 22, 2000

The benefits of teamwork should be obvious, but a recent study suggests that some CFOs and CIOs may need a refresher course.

Consider these findings from IT Cap Solutions, a division of technology leasing firm Comdisco Inc.

  • Information technology spending is not under adequate control, say some 86 percent of senior financial executives.
  • Two-thirds of CFOs say their companies’ CIOs are less than effective at managing and controlling IT expenditures.
  • Some 40 percent of the CFOs question the value of the information they receive from their CIOs.

More than 100 senior financial executives of New and Old Economy U.S. companies participated in the blind survey. The objective was to understand CFOs’ working relationships with CIOs and their attitudes toward IT expenditures. Well, we’ve reviewed the results and concluded this much: The relationship between CFOs and CIOs needs a marriage counselor.

Drive Business Strategy and Growth

Drive Business Strategy and Growth

Learn how NetSuite Financial Management allows you to quickly and easily model what-if scenarios and generate reports.

Oddly enough, despite all the apparent differences, nearly all CFOs say they work as a team with their CIOs. Roman Brunner, IT Cap’s global general manager, who helped create the survey, believes that the survey respondents toned down their criticism of their technology officers.

“When you do a survey, CFOs in particular officially don’t want to be too hard on their CIO colleagues,” Brunner says. “They say ‘yes, I understand the value,’ and ‘yes, we work as a team, and we’re communicating,’ as opposed to what they tell me at executive briefings or particular solution meetings when they’re by themselves.”

Brunner also says that there’s a strong difference in the relationship between CFOs and CIOs at New Economy firms versus Old Economy companies. Many traditional IT shops still view their role as a stand alone, legacy- type support, and they don’t see their role as adding any value to the firm’s core business.

All too often, a CIO at an Old Economy firm works in a vacuum and will buy or install a computer system before assessing its impact on the company’s bottom line. “If it’s not the right thing to do, there’s nothing they can do about it other than getting embarrassed in front of the board,” Brunner says.

In addition, Old Economy companies often have multiple systems, and any new hardware or software they get has to be integrated into the existing environment. That often adds a layer of complexity that New Economy companies can avoid. Young startups tend to have fewer existing systems so there’s less conflict to address when buying or integrating new technology.

In addition, a relatively high proportion of New Economy CIOs have MBA degrees and business backgrounds to complement their technology experience, while Old Economy CIOs are less likely to have both business and technology experience. CFOs at New Economy firms often have technology experience, too.

“In the New Economy companies, they work together and they do not make any big decisions on IT spending before they understand what the investment is and what it means to their bottom lines,” Brunner says. “If they do it as a team, it increases the efficiency.”