A recent survey of chief financial officers conducted by analyst firm Gartner and Financial Executives International’s Committee on Finance & IT indicated that CFO influence over IT is growing, with CFOs alone authorizing over 26% of all IT investments. So why are CFOs playing a more active role in IT and controlling a greater share of the organization’s IT spending?

CFOs have made the transition from being “number-centric” to being “business-centric” and play a critical role in influencing company planning and strategy. IT is a tool to enable businesses to execute their planning and achieve their goals. The CFO’s office is a natural repository for guiding and allocating resources for IT.

The demands of the marketplace and the business environment require technology investments to be evaluated like any other capital investment — with the attendant return on investment and business-case justification. The era of “must-have” has now evolved to “why-have,” since most organizations’ IT infrastructure is mature and there is resistance to adopting new technology unless there is a compelling business need to support the initiative.

Moreover, the regulatory environment as a result of legislation such as the Sarbanes-Oxley Act has also put a greater burden on finance executives to understand and report on the controls surrounding their IT environment.

The CFO needs to have a strategic understanding of how each aspect of the business intersects and the role technology can play in either enhancing or developing the customer interface (both internal and external) and monetizing IT investments. While no CFO can be a technology expert, their understanding of the business helps them articulate business needs to the technology team and remain an objective participant.

And why is the CFO best placed to lead this coordination? The CFO is the most appropriate person to connect the dots between the disparate needs of the enterprise and the strategic direction of the company. Harnessing that information and knowledge to guide IT strategy is a natural extension of their role as a primary custodian of company resources.

• Mahesh Shetty is COO and CFO of Encore Enterprise, a diversified commercial property firm with a focus on the southern US. With more than 25 years of experience as a senior finance executive, he is both a Certified Public Accountant and a Certified Information Technology Professional.

He is also a vice chair of the Committee on Finance & IT at Financial Executives International, the leading US association for CFOs and other senior finance executives. The group’s July survey of 334 finance chiefs found that:
• CIOs alone authorize only 5% of IT investment (compared with 26% by CFOs)
• 42% of IT heads report to the CFO, while 33% are answerable to the CEO
• While 47% of CFOs viewed IT as “strategic,” only 30% said that IT truly fulfills its mission.

Do you agree with this viewpoint? Have your say by commenting below — and see also this alternative view on the CIO/CFO debate from Arun Gupta, CTO of Shoppers Stop, the leading Indian department store chain.