Successfully managing IT strategy is no simple task, particularly when the decision makers’ roles vary from company to company. Research findings from Gartner and Financial Executives Research Foundation, for example, found that 42 per cent of organisations said their IT division reports to the CFO, 33 per cent to the CEO, 16 per cent to the COO, 2 per cent to a chief administrative officer and 7 per cent to other officers.
So with finance frequently involved in sanctioning IT expenditure, it’s no surprise that CIOs and CFOs have often had a troubled relationship.
As cloud computing starts to become part of companies’ IT strategies, what effect has this had on the CIO/CFO relationship? Do the views between the CIO and CFO remain opposing? Is this conflict holding up adoption of the technology? And what is needed for both parties to capitalise on its potential benefits? Let’s explore…
I recently conducted two pieces of research with Vanson Bourne – the first surveying 100 CFOs, the second reaching out to 250 CIOs. Within these, a sense of conflict between today’s CFOs and CIOs did emerge – specifically in the finding that 42 per cent of CIOs said it was their CFO colleagues that were opposed to a move to the cloud.
Steve Lea, my CFO, responds to this by stating that CIOs are frequently seen as only being interested in innovation and new technologies, with the financial implications largely an afterthought. The CFO is not overtly opposed to new technologies like cloud computing, but has to view any investment from the perspective of the company’s bottom line.
Dave Gilpin, my CIO, maintains that the responsibility of the CIO is to take a visionary approach – to overlook immediate, potentially minor merits in favour of longer-term, more substantial business investment. Gilpin also admits that CIOs can thrive on the glory associated with driving innovation – of sourcing and investing in something that brings about major change to an organisation, and being seen as the one person taking the business in exciting new directions.
It’s a different mindset to the CFO, one traditionally driven by the less high-profile, ongoing ambition to manage costs and keep a healthy financial bottom line. His view is that this can cause friction with the CFO’s continual focus on delivering more immediate cost savings.
However, the prospect of manageable lower costs, delivered through buying only what you need when you need it, is something that CFOs and CIOs could both get behind.
What also became clear from the research was that the CIOs and CFOs surveyed share many mutual priorities and concerns with regards to cloud computing. Such an opportunity brings with it a change of habit: in traditional models, technology is bought for a project, which will be expensive to use at the outset, but lower over time as the resources become fully utilised.
Perhaps as a result of pressure from the CFOs, research suggests that many CIOs do have cost-cutting front of mind from the outset, and that reducing expenses is one of three most pressing challenges they feel need resolving today. Feedback from CFO respondents, meanwhile, undermines the perception of them as solely worrying about financial aspects of investment.
Ensuring data is secure is paramount; in fact three times as many CFOs are looking for “a solid record of resilience and protecting of a customer’s data” rather than “impressive ROI” stats when selecting a cloud provider.
Security and the safety of data is a major issue for both parties, with over half (56 per cent) of CFO respondents citing fears around the security of sensitive customer or commercial data and only 15 per cent admitting to being happy to outsource all of their data.
That said, Steve Lea believes that CFOs need to realise that much of their data is already in the cloud; they may just not fully realise it – payroll is a classic example but there are countless other outsourced activities common to companies of today.
68 per cent of CIOs, meanwhile, are only happy to outsource data which is not critical or sensitive and only 10 per cent are “completely confident” in the security and resilience of third party cloud solutions. CIOs are demanding cloud providers to demonstrate greater clarity and visibility in their capabilities in the areas of data protection (71 per cent) and data security (66 per cent).
The hype of the cloud is also uniting the CIO and CFO, deterring them from embracing this technology, or at least creating reservations around diving headfirst into it. As many as 86 per cent of CIOs think cloud computing is overhyped, for example, while the high-profile nature of recent cloud outages from major service providers is understandably heightening CFO fears around this technology – with nearly half (45 per cent) of the CFO respondents admitting that such cases make them more inclined to keep their data in-house, despite the cost implications.
Steve Lea, builds on this, stating that the word ‘cloud’ itself is one that’s vague and ambiguous, and that this terminology helps put CFOs off from the technology associated with it.
With CFOs and CIOs in fact sharing many concerns regarding cloud computing, it stands to reason that informed, appropriate steps can be taken to help address the issues both parties face. Information is the starting point vendors need to look to. The research found that only 34% of CFOs admit to fully understanding the benefits of moving to the cloud.
Dave Gilpin echoes this, stating that, in reality, the majority of executives do not yet know someone that has made a major transition to the cloud – meaning the decision to move to the cloud or not is often a judgement call, rather than one based on first-hand experience or insight.
Vendors need to address quickly the limited number of C-level executives that fully understand this technology, as many are demanding clarity on specific points. Providing greater insight on cloud offerings will enable CIOs and CFOs to make a better investment for their companies, based on what the solution can do for their specific needs. It will also help cut through the hype surrounding cloud computing, taking the conversation away from the media landscape and into the boardroom of each business.
Ultimately, even if they may appear to take different approaches, the end objectives of the CIO and CFO revolve around making worthwhile investments, delivering ROI and driving business productivity. Technology like cloud computing does have the very real potential to match these criteria. It’s now a matter of bridging the disconnect that lies between the available offerings and the perception of the decision makers within organisations. With the correct proof points in place, the politics and tensions within any business can be put aside in favour of innovation that will drive the company forward.