Who's The Boss?

If you're in charge of IT, who's in charge of you? It depends a lot upon what industry you're in, according to a new survey by Forrester Research, which queried CIOs about their reporting relationships.The Forrester phone survey of 503 "IT decision makers" found that CIOs in industries like business services and financial services tend to report to the CEO, while CIOs in retail and wholesale business most often report to the CFO. According to the survey, 46% of CIOs in business services firms report to the CEO. The CEO also is the boss of CIOs at 37% of financial services firms and 35% of manufacturers.

The CFO is most likely to be the CIO's boss at retail and wholesale companies, where 33% of CIOs report to the financial chief. The CFO also tends to be the CIO's boss at media, entertainment, and leisure companies, where 27% of CIOs say they report to the CFO.

But CEO and CFO aren't the only bosses for CIOs. In some companies, the CIOs report to others, including the president, chief operating officer, or the head of business units. That's a relatively new trend, says Alex Cullen, VP and director of research at Forrester, in an interview with InformationWeek.

Forrester has been tracking the reporting relationships of CIOs for a while, "but not in a way that makes it easy to draw conclusions" with hard data from the past, he says. The new report, "CIOs: Reporting Relationship Defines Your Job Only At The Margin," attempts to pinpoint some statistics about CIOs, their bosses, and IT spending.

In general, the biggest change in reporting relationships of CIOs is that in the past, CIOs tended to either report to the CEO or the CFO, says Cullen. Now, other executives are more frequently in the mix.

"The pendulum is swinging," says Cullen. "Today, the CIO who doesn't report to the CEO might be reporting to someone other than the CFO, like the COO," or a business unit head, he says.

The findings by Forrester are similar to those seen in other recent surveys, including one conducted last year by the Society for Information Management.

In that survey, SIM found that 31% of CIOs reported to their companies' CEOs in 2007, down from 45% in 2006. That was a pretty big shift. However, SIM also found that CIOs who don't report to the CEO don't necessarily report to the CFO, either. While 29% of CIOs who responded to the SIM survey said they report to the CFO, the SIM survey also found a surge in CIOs who report to business unit heads -- nearly one in five, up from only 15% in 2006.

The good news in this trend of having CIOs report to others instead of the CFO, says Cullen, "is that it shows for most companies, IT isn't seen as mainly a cost."

That's because CFOs tends to be the stingiest of bosses for IT budgets.

Across all companies and all industries, CIOs who report to the CEO have the largest IT budgets -- an average of 6.6% of revenue -- while CIOs who report to the CFO have the smallest IT budgets, or an average of 4.2% of revenue.

"I guess you could say the headline on this is CFOs are penny pinchers when it comes to IT spending," quips Cullen.

CIOs who report to the head of a business unit tend to get the second-largest IT budgets as a percentage of IT, an average of 5.5% of revenue. CIOs who report to the COO have an IT budget of about 4.8% of revenue, according to the survey.

Who does your CIO report to? And do you think that pecking order has an impact on your company's IT spending? Let us know what you think. Also, for more about CIO trends -- especially whether the CIO's influence is waning, check out a recent report on that exact topic by my colleague, John Soat.