Financial executives are bullish about digital transformation, and they refuse to let precious IT resources go to waste on low value projects. They would rather defer so-called “next-generation disruptive technology initiatives” and “major ERP reimplementation and migration projects.” By optimizing use of existing technologies, chief financial officers see clear business value and strong return on investments.
These are some of the key findings from the report “CFO Peer Insights: Digital Transformation and IT Spending Priorities” conducted by Dimensional Research and sponsored by Rimini Street, a global provider of enterprise software products and services. The report is based on a global online survey participated by more than 1,500 top finance professionals from 13 countries, representing companies with at least $200 million in annual revenue.
Bullish about digital transformation
When it comes to digital transformation, it is more than a buzzword for chief financial officers (CFOs). While the large majority on the survey cite digital transformation as a top-five priority compared to other corporate initiatives, 59 percent consider DX in their top three priorities. In addition, almost half (46 percent) say increased technology spending is being driven by new digital transformation investments.
Due to the Covid-19 pandemic, consumers shifted dramatically to online channels and businesses responded by increasing digital investments. The global pandemic in 2020 removed internal barriers, aligned corporate teams and accelerated the adoption of technology to support new business critical requirements, from remote work to digital customer interactions to supply chain resourcing.
Clear business value, ROI from existing investments
CFOs expect their chief information officers (CIOs) to present technology investment proposals that demonstrate business value and strong ROI. Among the IT projects CFOs personally want to see more of from their CIO, “optimizing existing technology investments” topped the list with 44 percent of survey respondents. CFOs also cited “revenue-generating technology initiatives” (40 percent) and “process improvements and employee efficiency” (39 percent) as their second and third choices respectively.
CIOs who continually optimize their IT operations are in a strong position to create and secure new funding for strategic IT investments. As a result, IT resources – including time, money and personnel – could be reallocated to critical new revenue generating initiatives that create competitive advantage and growth for their organization.
Low value projects waste precious IT resources
In terms of primary considerations for IT spending, 67 percent of CFOs surveyed agree they “refuse to waste precious dollars on IT investments that don’t move the needle.” In addition, 70 percent of respondents say they want to cut spending on non-essential IT investments, which include “next-generation disruptive technology initiatives” and “major ERP reimplementation and migration projects.” When there is not a strong ROI, technology for (enterprise resource planning) technology’s sake or forced by major ERP vendors does not satisfy CFOs that want to see strong business value for IT investments.
Large technology investments may not have a clear business case, such as some vendor-forced ERP migrations and upgrades, may be better deferred or avoided. Instead, ERP systems could be optimized through strategies like third-party support, enabling the CIO to free up IT resources to help accelerate digital transformation programs.
Strong CFO-CIO partnership is critical
Technology is expanding the role CFOs and CIOs play in an organization, as well as the need for a close collaboration between IT and finance. Today’s CFO and CIO must have a solid understanding of customers and markets and technology’s role is connecting them. If both roles collaborate, they could be a productive, powerful team for the business – 92 percent of CFOs agree a successful CFO has a great relationship with their CIO counterpart.
The survey also revealed 69 percent of CFOs have a favorable view of their CIOs, with 47 percent stating their CIO is a partner “that helps connect the dots between technology and business decisions” and 22 percent stating their CIO is an “innovative change-agent that drives business strategy.”
