CEO, CFO set different CIO agendas

CIOs who report to the CEO have much different business objectives than those who report to the CFO -- and apparently more clout within their own organizations. But reporting to the CFO doesn't mean you won't have a place at the table.

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Getting a job is often about who you know in high places. A recent report from Forrester Research Inc. on CIOs at consumer goods manufacturers suggests that who you report to will have a substantial effect on your IT agenda and clout.

The survey, in collaboration with Consumer Goods Technology magazine and RIS News, looked at CIO reporting structures at 120 manufacturing companies with revenue of more than $250 million. Cambridge, Mass.-based Forrester found that CIOs who reported to their company's CEO were more likely to be immersed in technologies that promote top-line sales growth, while CIOs reporting to the company's CFO focused their resources on technologies related to compliance and cost-cutting.

The authors stress there is no "right" boss for the CIO. The IT executives surveyed reported to the CEO or the CFO in equal measure (43% each). There was no obvious correlation between the size of the company and the reporting structure, or the reporting structure and the tech intelligence of the boss.

The relationship does have implications, however. IT shops where the CIO works in close collaboration with the CEO fall into the IT archetype Forrester calls Player Partners, while CFO-driven shops are Trusted Suppliers. Each comes with its own challenges. And make no mistake: The boss is destiny. A savvy CIO will embrace -- not work against -- the archetype, and look for ways to promote and expand the boss's agenda.

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The Forrester study found that consumer product companies with a CEO-CIO connection focus on brand awareness at the point of purchase, or store level. CIOs work with CEOs to get the right mix of products on the store shelves, and likely work with the company's retail customers to retrieve and analyze relevant data.

"A lot of these CEOs at consumer products companies are really driven by creating value at retail, and that means improving their performance on the store shelf with replenishment activities, making better use of retail data they're receiving, like real-time point-of sales, and loyalty data," said Forrester analyst Christine Spivey Overby, lead author on the study.

CEO-CIO companies are 10% more likely to receive point-of-sale data on a regular basis from retailers than their CFO-CIO counterparts; 12% of CEO-CIO firms also receive market basket data, or information that shows what products show up together in an individual's shopping cart. The percentage seems small, Overby said, until compared with the 2% of CFO-CIO firms that receive this data.

Deriving business insight from these kinds of data often requires new applications or reconfigurations of current applications, including Web services that allow you to combine certain services from each of the applications.

CIOs driven by CEOs, or the so-called Partner Players, "can't rest on their laurels," Overby said, but must continually ask how IT can contribute to new products and services and business models that drive those top-line sales.

CFO-CIO: Think SOX

CIOs reporting to CFOs inevitably will reflect their boss's top concerns, namely compliance and cost-cutting. CFO-driven shops, or Trusted Suppliers, focus on applications that accurately track the flow of funds back and forth between trading partners. They tend to collaborate more on order management and fulfillment to reduce invoicing errors. They assess and test technologies that support financial processes and improved control -- not surprisingly, since the CFO's name is now literally on the line for compliance with the Sarbanes-Oxley Act.

"I think the dichotomy is very accurate," said Larry Rencken, CIO at Welch Foods Inc., the famous juice and jelly maker in Concord, Mass. "But I would stress that CIOs reporting to CEOs will also be collaborating closely with suppliers, not just retailers. There is so much technology can do today to enable and improve collaboration with suppliers. Having a relationship with the CEO can really enhance that."

Rencken, who came to his job from marketing with a mandate to make IT more strategic, reports to the CFO. Before he was named to the job in June 2005, however, he made sure he understood the CEO's view of IT. "He made it very clear that the incoming CIO should have a seat at the strategic table and have significant influence on business process improvements that will help the business," Rencken said, adding he could imagine a future where the CIO reports to the CEO at Welch. "We're not there yet."

Let us know what you think about the story; e-mail: Linda Tucci, Senior News Writer

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