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In SMBs, the CFO role in IT decisions grows

CFOs have long played a key role in making IT investments, and in recent years this influence has not only been maintained, but is growing, according to research from Gartner based on a survey of about 200 senior financial executives of all sizes from various industries.

Overall, the June 2014 survey found that 29% of CFOs made IT decisions, compared with 24% from 2013 and the same percentage from 2012 — more authority over IT than any other executive, including the CEO (23%) and the CIO (5%). But more significantly for small and medium-sized businesses (SMBs), the CFO’s rising influence is even more apparent in those organizations: Thirty-eight percent of CFOs authorized technology investments in small businesses (those with as much as $50 million in annual revenue), compared with 35% at midsize companies (more than $50 million to $1 billion) and 14% at large enterprises (more than $1 billion).

Another interesting finding is that in SMBs, there’s a higher occurrence of CIOs reporting to CFOs. The midsize-company group showed the highest occurrence, at 58%, followed by small organizations (49%) and large businesses (35%). The report does issue a caveat about the bias in the study — that technology-minded CFOs were more likely to respond than those with only a fleeting interest in IT. Given this pool of respondents, the number of occurrences of IT reporting to the CFO in the SMB group is substantially higher compared with other Gartner surveys, the report’s authors said.

SMBs lack CIO-CFO partnerships

However, despite CFOs’ growing IT decision making role, not many are partnering with their CIOs on those decisions, particularly in SMBs, the study found. Only 14% collaborated with IT on IT decision making in midsize companies, and a mere 11% work with their CIOs in small organizations (in large organizations, the number is slightly higher, at 16%). This data indicates that although these financial executives understand how crucial technology is to business success, quite a number of them see themselves as either directly responsible for IT or at least a major authority on IT decisions. These perceptions make sense, according to Gartner, because CFOs are generally tasked with controlling their organizations’ budgets and examining the highest-value items. But furthermore, the data seems to suggest a gap: Something is holding these executives back from consulting with CIOs when making these decisions.

While the Gartner report doesn’t offer any possible reasons for this gap, CIO analyst and ZDNet columnist Michael Krigsman believes that other recent survey reports that show similar results indicate that many CIOs still lack credibility and respect from their business peers, and points to three contributing factors in his column, including the persistence of old perceptions of IT as just about infrastructure and CIOs’ struggling to find their place in a digital world where IT expectations have shifted.

So what should SMB CIOs do to address this divide? The Gartner report’s authors strongly urge companies to make sure not only that their CFOs are educated about technology, but that CIOs and CFOs are speaking a common language when it comes to how to use this technology for competitive advantage. “CFOs and IT professionals need to understand how the CFO should be involved, to ensure that the right investments are selected in IT to deliver the right benefits based on the organization’s goals and strategies,” they write. Krigsman’s advice on how to start: “spending more time with business departments and leaders, learning nuances of their needs and goals.”