CIOs are no longer managed by the financial institution in IT decisions

This change will be gradually implemented across all companies in the sector.

The IT department of some companies is undergoing restructuring which directly affects the design of the location of some functions. For some years now, a review of organizational structures has been underway, which means that administrators who in the past have had influence on IT issues are replaced by others who have, in addition to management ability, also the technical ability to decide on the best strategies of a company in technological matters. It is therefore recommended that there is clear and objective communication between all collaborators involved, in order to guarantee positive results for the company in all aspects.

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This entire scenario points to the movement where CIOs will begin to respond as if they were strategic leaders within the company. However, this change has the potential to go further: CIOs will also be able to respond to the C-suite, involving CEOs and managers.

This trend is already accompanied by specific research companies in the field of Information Technology. The most recent was done in 2014 by the UK’s CIO Newspaper and revealed that nearly 49% of companies’ IT department heads report exclusively to the company’s top executive.

Only 19% report to CFOs (chief financial officers) and 24% to two COOs (chief operating officers). The rest report to another leader in the organization.

CFOs, being responsible for the financial management of the company, have lost space in the decision-making process which involves the production of constant economic and financial analyzes and reports; the preparation of short, medium and long-term financial plans and budgets; cost control; study of financial applications; analysis, negotiation and decision on financing sources, among other functions. And in some companies the position of CFOs is relatively similar to that of a financial administrator.

Among the decisions that must be made by CFOs and IT professionals are how to reduce the costs of IT operations and direct the budget towards activities that enable greater growth, without leaving innovation aside. Perhaps this similarity is the main reason why they lose influence in decision making.

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This change will be gradually implemented in all companies in the IT market. Research reveals a significant annual decline in the percentage of IT leaders reporting to finance leaders and progress in operational leaders. To give you an idea, in 2014, the number of CIOs answering for CFOs was 30%, with 10% answering for COOs.

With this same change in scenario, it is important to highlight that, in this period of transition towards a digital world, it is essential that professionals involved in corporate IT have a direct line to the organization’s leadership, with the aim of influencing the direction of the company.

Although CFOs have lost influence in decision-making, research conducted by Gartner, in collaboration with the Financial Executive Research Foundationindicate that 42% of organizations assessed still have IT areas subordinate to the CFO and 33% to the CEO. But in many companies, CFOs and CIOs already do work in harmony with the sustainability of financial processes. For what they use software and specific IT tools.

The changing numbers

This digital transformation brings with it the promise that virtually every organization will become a technology company. But will it be? The context is encouraging on the one hand, but on the other it imposes challenges on several managers. The IT area of ​​a company is no longer analyzed as a cost center. Without a direct line of communication, senior IT executives enjoy a high degree of closeness to their CEO.

Research indicates that 44% of managers meet with the CEO at least once a week to discuss company strategy. The degree of representation in the administration is less than the 50% recorded; in 2013: it fell to 37%, although 93% said they belonged to some type of management body or board of directors. And, in 2013, according to research, 78% of CIOs said they had a say in the “leadership team in business decisions.” But it’s worth pointing out that while the direct line of communication with the CEO is important and desirable, the quality of this information can influence corporate monitoring.

Sources:

http://cio.com.br/carreira/2015/04/28/cai-a-influencia-dos-cfos-nas-decisoes-de-ti/

http://www.knoow.net/cienceconempr/gestao/cfo.htm#vermais

http://cio.com.br/gestao/2015/05/18/a-governanca-nao-pode-inibir-a-inovacao/

http://letstalk.globalservices.bt.com/pt/2011/06/cfos-decidem-mais-sobre-ti-do-que-os-cios/