|CFOs take on bigger role in tech spending|
The chief financial officer is increasingly a top technology-investment decision maker, according to a joint study by Gartner, Inc., and Financial Executives Research Foundation, the research affiliate of Financial Executives International (FEI).
The study shows that the CFO’s role has grown in the last year with 44% of 255 surveyed CFOs claiming their influence over information technology (IT) investment has risen since 2010; 47% saying it has remained the same; and just 9% saying it has declined.
The fourth annual survey was conducted to determine CFO views on the economic environment, the CFO’s role in technology, and CFO IT investment priorities. It was conducted between October 2011 and February 2012.
“The CFO and CIO are well-positioned to work together at generating business value from enterprise IT investments. However, this performance is often not achieved because of poor perceptions of IT, a parochial CFO or CIO perspective, or simply a failure to invest in the CFO-CIO relationship,” says John Van Decker, research vice-president at Gartner. “This year’s results show that, in most organizations, the CFO and CIO work together to finance IT and provide information that supports enterprise processes. But there is also an opportunity for them to form a powerful alliance that generates more value for the enterprise.”
CFOs are involved in making IT investment decisions. Forty-one percent said they were the leader of a group responsible for IT investment; another 41% were part of a group responsible for IT decision making; 16% provide advice; and 1% percent were the sole decision maker. Since the majority were involved in group IT decision making, engaging the CFO is clearly a critical issue.
“CFOs need to explain to CIOs the IT capabilities needed by the finance function,” says Bill Sinnett, director of research at FERF.
One reason CFOs are important stakeholders is that they control IT funding. Although CFOs don’t strictly decide who receives money, they are powerful influencers and enforcers of policies and decisions. CFOs often have greater access to, and involvement with, senior business governance groups, and usually have strong influence and credibility with the CEO and board.
Study responses confirm that current IT spending is healthy. Many CFOs will consider increasing IT investments if a business improvement can be made. From an IT operating-expense perspective, 39% of CFOs see a similar IT expense budget in 2012 from 2010, while 44% forecast an increase. For IT capital appropriations, 32% foresee status quo on spending, while 48% are expecting an increase. When asked how companies view spending in 2013 versus 2012, 51% see the same IT operating expense levels; and 41% forecast similar IT capital spending, while 44% see an increase in capital spending in 2013 over 2012.
When it comes to investment, the study shows that business intelligence (BI), analytics, and performance management are at the top of CFO lists. The top business-process area for tech investment was identified as the ability to facilitate analysis and decision making (57%), followed closely by collaboration and knowledge management (52%).
The analysts identified four major technology trends on the CFO’s radar that will drive tech planning, investment, and usage in 2012 and beyond. These are the nexus of social, mobile, cloud, and information. Organizations are being challenged to adapt as these technologies and the data that result from their adoption and deployment—internally to the enterprise and externally with customers—expands exponentially. With the exception of social media, which scored low in terms of technology initiatives, mobile, cloud (including software as a service, SaaS) and information are CFO priorities.
“While CFOs certainly appreciate reduced cost through the more efficient delivery of IT, organizations need to understand that CFOs want technology investment that they can see business value from, in the form of improved business processes. Therefore, their priorities are largely focused on analytics and business applications,” says Sinnett.
“CFOs are beginning to look at technologies that can span BI and applications and deliver applications through mobile access and via SaaS,” says Van Decker. “While these nexus capabilities are a concern more in 2013, IT organizations must communicate how more-effective business platforms can be leveraged to deliver better architectures for business applications that are top-of-mind to the CFO.”
[This article was posted on May 29, 2012, on the website of ABA Banking Journal, www.ababj.com.]
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