CloudNews & AnalysisResearch & Whitepapers

CFOs Are Ready for Digital Transformation, Shows Study

While digital transformation has been a major priority for finance leaders in the past, the pace of transformation has materially changed. The last one year, has especially transformed many aspects of business as usual. Companies have rejiggered budgets and strategies to exist in a more digital-first world. And CFOs are increasingly realizing the value of new digital technologies – working hand in hand with the CIO – something that was in their bucket list, but was ignored for long.More focus on digital technologiesAnd this trend gets reflected in a recent Gartner survey, which reveals that CFOs are increasingly expressing a widespread intent to invest in emerging technologies in the next three years, with cloud enterprise resource planning (ERP) being the most favored choice, according to Gartner, Inc.

“CFOs are trying to figure out the digital landscape and ways to identify and execute cost savings opportunities in order to allocate more funding to digital initiatives,” said Dan Garvey, vice president in the Gartner Finance practice. “As with many business functions, COVID-19 has accelerated the pace of finance investment in digital transformation.”

“Digital investment and transformation are no longer things that CFOs can take a ‘wait and see’ approach on or throw small investments at. The time is now, and CFOs need to act swiftly,” he said.

Advanced data analytics, data storage, and robotic process automation (RPA) were all likely areas for investment in the next three years, while artificial intelligence (AI) and blockchain were less common responses

CFO’s Likelihood of Investment in Emerging Technologies in Next Three Years ( Source: Gartner)
“It’s not surprising to see cloud ERP as the top choice for finance heads because it is a maturing technology with clearly established benefits that offer an escape from the bloated ‘monolithic’ ERP systems of yesteryear,” said Garvey. “Advanced analytics, data storage and RPA are also all established technologies with well-proven use cases in finance.”AI and blockchain, however, are not so well-established and for many believe these technologies would pose bigger implementation problems and a less certain return on investment. Moreover, it is possible to get some exposure to the potential benefits of AI without investing directly.“Many cloud ERP and advanced analytics offerings are increasingly offering embedded AI capabilities, and that neatly solves many challenges around integration and in-house expertise,” he said. “There’s no doubting the potential of building your own AI, but is the finance organization capable of realizing that potential?”

Blockchain also has great transformative potential, but right now out-of-the-box use cases are also limited and not applicable to most of the work that the finance organization conducts. The size of the business in revenue correlates closely with its propensity to invest in AI, Blockchain or the Internet of Things (IoT).

“This is likely in part because of the sophistication of an organization’s IT infrastructure,” said Garvey. “Implementing AI, blockchain or IoT is unlikely to be simple, and there are lower hanging fruit for most finance organizations that want to drive meaningful gains with emerging technologies.”

CFOs’ role change

Until recently there has been much discussion and debate on the relationship between finance and IT. The nature of collaboration between the CFO and CIO can make-or-break the organization’s ability to transform, believe experts as several studies have also emphasized that CFOs must understand and value the potential that CIO and his IT team brings, in the form of enhanced data analytics and technology adoption.

A Deloitte study goes one step ahead to show that in organizations in which the CIO reports to the CFO, the allocation of IT budgets to day-to-day operations is slightly higher (60%) than in those in which CIOs report to CEOs (53%) and these organizations also spend less on business innovation and incremental business change.

As Deloitte Consulting’s Principal Matt Schwenderman observes, “The CFOs that I consider to be progressive and innovative have a very different view of that relationship,” he said in a statement. “They actually look to the CIO for ways to improve their own function, and are using the CIO to bring knowledge and skills that can be leveraged by finance.”

From these research one can conclude that irrespective of the industry, IT teams should work hand in hand with the organization’s financial leaders to demonstrate the value and impact of technology and this partnership would be even more crucial going forward.

Leave a Response