Digital transformation is a top priority for finance leaders but IT investments must have clear business value to receive chief financial officer (CFO) support, the Rimini Street Global CFO Study has revealed.
Eighty per cent of CFOs globally put digital transformation within their list of top priorities. While 71 per cent see investment into this as key to their company’s success.
Seventy-seven per cent of CFOs revealed they would help the chief information officer (CIO) find a way to fund a new digital transformation project if the initiative delivered strong return on investment.
Of the 80 per cent of CFOs who expect their technology spending to increase in 2021, almost half say this growth in spending is being driven by new digital transformation investments.
One of the CFOs’ primary considerations for IT spending is prioritising projects that yield positive business outcomes. Sixty-seven per cent of CFOs surveyed said they ‘refuse to waste precious dollars on IT investments that don’t move the needle’.
Furthermore, 70 per cent wanted to cut spending on non-essential IT investments. When quizzed about the type of IT projects they personally prefer to cancel when they don’t see clear business value or strong ROI, responses included ‘next-generation disruptive technology initiatives’ and ‘major ERP reimplementation and migration projects’.
Behind the report
Sponsored by enterprise software provider Rimini Street, the 2021 CFO Peer Insights: Digital Transformation and IT Spending Priorities report is based on a global online survey conducted by Dimensional Research.
The report grilled more than 1,500 CFOs or equivalent top finance professionals from 13 countries, representing companies with at least $200million in annual revenue.
It discovered that although digital transformation was on the roadmap for many companies prior to 2020, the global pandemic 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.
“Digital transformation is a top priority for CFOs but reinforces that IT investments must have clear business value to receive CFO support,” says Seth A. Ravin, CEO at Rimini Street. “It’s not surprising that CFOs want to cancel IT projects that lack a strong ROI, like many software vendor-forced ERP reimplementations and migrations, given that resources can be liberated for new technology investments that accelerate achieving the businesses digital goals.”
Teamwork makes the dreamwork
Ninety-two per cent of CFOs say ‘a successful CFO has a great relationship with their CIO counterpart’. While, 69 per cent of CFOs have a favorable view of their CIOs, with 47 perc cent stating that their CIO is a partner ;that helps connect the dots between technology and business decisions’. Twenty-two per cent state that their CIO is an ;innovative change-agent that drives business strategy.
However, the study shows that 92 per cent of CFOs say that the CIO needs to be more business savvy now than they were two years ago. And, 94 per cent agree that CFOs need to be more technology savvy than they were two years ago.
The Rimini study was conducted to identify CFOs’ perceptions of digital transformation, their IT spending priorities, how they measure the ROI on technology investments and their viewpoints on the CFO-CIO partnership.
Going for it
CFOs expect the ROI on technology spending to be swift, with 46 per cent of CFOs expecting to see ROI on their technology investment within two years, and the vast majority within three to five years.
But it’s all about the timing. The majority of CFOs prefer that the CIO involves them before the business plan is fully crafted. For example, 47 per cent of CFO respondents would rather have the CIO engage as the business plan is being developed. Plus, 41 per cent want IT to partner with finance when the idea is fully formed but before the business plan is completed.
What to spend
Eighty per cent of global CFOs expect their technology spending to increase this year. Ninety per cent of UK CFOs agree, only 71 per cent of French and 70 per cent of German CFOs concur.
The types of technology investments achieving the most value include employee remote work, mobility and the Internet of Things. Other areas cited as driving value include shifting infrastructure to the cloud, customer-facing SaaS technologies, business intelligence and data analytics, and security technologies.