CIO role still relevant to businesses

IT heads continue to play a pivotal role steering their companies toward increased market advantage, even if they now report to their CFO, not CEO.
Written by Sol E. Solomon, Contributor

Moves to make IT heads a direct report under the CFO, rather than the CEO, should not be seen as an indication that the CIO role is diminishing, say observers.

In fact, Dimitri Tsamados, a partner at executive search firm CTPartners, said CIOs are starting to enjoy greater empowerment. "We're actually coming from an environment where CIOs were not empowered with strategic responsibilities, but the function is slowly being upgraded," he said in an e-mail interview. Tsamados is part of CTPartners' technology, media and telecom practice.

CIOs have been "gaining in weight" and getting a seat at the corporate board table as trusted advisers, Tsamados said. "Bringing IT issues to the boardroom and raising the CEO's or president's awareness of the opportunities IT offers, have had a significant impact [on the company]."

Gartner's 2008 CIO Survey in Asia-Pacific, excluding Australia, New Zealand and Japan, which was released earlier this year, 20 percent of CIOs report to the CFO, compared to 43 percent who report directly to the CEO.

However, Andrew Rowsell-Jones, vice president and research director at Gartner, said large organizations that regard IT as a strategic tool are unlikely to move the CIO role to one that reports to the CFO.

Many businesses across Asia are only now starting to use technology to automate business processes, Rowsell-Jones said in a phone interview. "So there's still a lot that the IT department can do."

IT began out of the finance department in the 1980s, where it was deployed to automate functions related to general ledger and billing, he explained. Its use eventually extended to the other parts of the organization.

Rowsell-Jones noted: "There were good reasons why CFOs gave up the CIO role. Supply chain, the Web, and so on, created lots more complexity for IT to be moved outside of the finance department."

However, with growing concerns over the current economic climate, he said IT budgets are now under much scrutiny and costs have to be more carefully managed.

As companies tighten their budgets, Rowsell-Jones noted that IT departments should have a person with some competence in finance, or "borrow one" from the finance department, to look at cost-related matters.

EMC CIO Sanjay Mirchandani said he reports directly to the CFO, but said this does not diminish the need for a CIO.

"Today's organizations face an exploding digital universe of information," Mirchandani told ZDNet Asia in an e-mail interview. "CIOs need to be active stewards of their company's information, and know as much about their information assets as their CFO knows about their company's financial assets."

"Implementing a companywide information governance initiative is one of the most valuable moves corporate leaders can make, to create and enforce policies that help ensure information quality, compliance and protection, while increasing its business value," he said.

While companies currently are cautious in their spending, CIOs continue to spend in areas that give the business agility and efficiency, as well as position their companies for increased market advantage, Mirchandani said.

"In other words, companies will invest to grow share now and more importantly, in the future. Aligning the CIO with the CFO can help in this regard," he added.

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