A few weeks ago, I promised to back up some of my assertions about the CIO-CFO reporting relationship with some numbers from our upcoming State of the CIO survey. I've been crunching the numbers for weeks now and the results are more disconcerting than I ever imagined. Having the CIO report to the CFO destroys value in nearly every possible way. Just check out this list, from our survey of over 500 IT leaders:

Less exposure to other CXOs: CIOs who report to the CFO are part of the executive committee only 41% of the time, significantly less than the average for all our respondents (68%) and less than half as much as CIOs who report to the CEO (92%).

 

More time on tactical, less on strategic:

Running projects--More CIOs who report to the CFO spend time running projects (49%) than those who report to CEOs (39%)

Less strategic business planning--Just 31% of CIOs who report to CFOs said strategic business planning was a big part of their jobs versus 49% of those who report to the CEO and 41% of overall respondents.

Stuck on compliance--Some 21% of CIOs who report to CFOs said compliance took up a lot of their time, versus 13% of those who report to CEOs.

 

Lower budgets: CIOs who report to CFOs have a significantly lower mean percent of revenue spent on IT (4.56) than those who report to CEOs (9.32) and the overall average mean (7.37).

 

Less budget control: CIOs who report to CFOs are much more likely to have spending centrally controlled by a non-IT executive (13%) than those who report to the CEO (5%)

 

Less ambition: CIOs who report to CEOs are significantly more likely to say that IT should proactively envision business possibilities (69%) than those who report to the CFO (57%).

 

Less innovation leadership:

Implementation only--CIOs who report to CFOs are much more likely to be playing an implementation role only (17%) in innovation than those who report to the CEO (8%) and the overall average (13%)

Less personal involvement--CIOs who report to CEOs are much more likely to have innovation be a dominant part of their role (15%) than those who report to CFOs (7%) and significant part of their role (52% versus 47%).

Less revenue generation--CIOs who report to the CEO are significantly more likely to focus on revenue generating products (30%) than those reporting to the CFO (20%). In terms of impact on the business, 26% of CIOs who report to the CEO said they grew existing revenue, versus just 16% of those who report to the CFO.

 

Less IT value: 40% of CIOs who report to the CFO said the difficulty of proving the value of IT is a significant hurdle to getting their jobs done, while only 21% of those who reported to CEOs cited it.

There are other examples I could cite that are less cut and dried in terms of strategic significance (such as CIOs who report to CEOs being nearly twice as likely to have a year or more experience with SOA than those who report to the CFO), but I'll stop there.

I know that some have argued that a CIO-to-CFO reporting relationship can work in a company that views IT as tactical, but that assumes that the situation will never change. And it will change. IT is young and immature (which is why Nick Carr's analogies to railroads and electric utilities are absurd) and something is sure to crop up around the corner that could present an opportunity for a company that uses IT tactically to start using it strategically. Bury your CIO inside finance and you'll be sure to miss that opportunity.

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