Christopher Koch posted CIOs reporting to CFOs: The Numbers Do the Talking in which he cites a raft of stats to show that CIOs prefer to report to the CEO rather than to the CFO.
He even goes so far as to say that Having the CIO report to the CFO destroys value in nearly every possible way.
Pretty dramatic stuff, but none of the stats back this assertion up. If you report to the CFO you spend more of your time on compliance, have a lower budget, and spend less time on innovation than if you report to the CEO. So perhaps reporting to the CFO is less fun, but there isn’t any evidence offered as to why it is better for the business if the CIO reports to the CEO.
The most telling stat is that 26% of CIOs who reported to the CEO grew revenue as against 16% of CIOs who reported to the CFO. What a damning indictement of Technology leaders. 75% – 85% of Technology leaders don’t do anything to increase revenues. And yet we, as an industry, have the gall to whine about how much fun it is for us to report to the CEO or the CFO!!
I like to keep things pretty simple (one of the beauties of working in a smaller company is that you are close enough to the sharp end to be able to do this). To put things in their simplest terms, any leader in a business can do any of the following:
1. Increase Revenue (short term or long term)
2. Control Costs
3. Soft Stuff that can’t be quantified: process improvement, controlling assets etc
If you can do 1-3 then you are of strategic significance to the business and can make a strong case to be reporting to the CEO. If you are only doing 2 and 3 then things are more debatable, but you are basically a support function and so you may as well be reporting to the CFO.
The challenge and disconnect are where the Technology leader believes that IT can impact current or future revenue growth, but the rest of the business sees IT purely in terms of its nature as a support function.
But rather than complaining about whether you are reporting to the right person, Technology leaders should focus on demonstrating how their activities are increasing revenue, or could increase revenue (or, if you prefer, company valuation). If keeping the lights on helps you grow revenue then shout about it. If you are building new products and processes that deliver revenue then shout about the revenue you are building. If there is nothing you can do about revenue then just keep your head down, who you report to doesn’t matter.