CFOs are taking a extra assertive position in IT selections in Australia and New Zealand in 2024.
Analysis from enterprise software program options agency Rimini Avenue reveals that CFOs at the moment are typically those guiding underlying know-how selections — a duty historically held by firm CIO’s.
The analysis, C-Suite Imperatives: Evolving IT and Enterprise Investments, surveyed 250 CFOs and CIOs within the ANZ area. It revealed that nearer collaboration is bettering CFO and CIO relationships, which might lead to greater IT budgets and enterprise return on funding.
As much as 70% of know-how selections contain CFOs in 2024
CIOs as soon as had major duty for the tech selections made by enterprises. Nevertheless, Rimini Avenue’s analysis discovered 60% of CFOs say they’re those chargeable for underlying know-how selections to realize enterprise outcomes, marking a shift in how selections are made.
Specialist IT analysis agency ADAPT Analysis has additionally famous this development. ADAPT’s strategic analysis director, Matt Boon, estimated at a current Sydney convention that CFOs at the moment are concerned in 70% of all IT funding selections. He mentioned this stage was “the highest we’ve ever seen.”
CFOs aren’t the one ones who discover this shift. CIOs agree that their CFO counterparts are those making the underlying know-how selections and taking the lead position in setting know-how funding price range ranges.
Why are CFOs extra concerned in know-how selections?
The elevated concentrate on financials in Australia and New Zealand is not any secret. The market has seen rising inflation, greater rates of interest and slower enterprise progress. IT leaders within the area have been underneath stress to do extra with the identical or much less or face slower price range will increase.
Useful resource: How CFOs have developed from quantity crunchers to worth drivers
The atmosphere has drawn CFOs nearer into know-how oversight and decision-making. CFOs have been involved about value, as components like rising cloud prices impression the underside line. They’re additionally within the contribution know-how investments make to enterprise progress.
CFOs lament lack of reference to enterprise targets
The Rimini Avenue report confirmed that solely 23% of CFOs are proud of the impression tech investments are making on their enterprise targets — a serious motive why they’re extra concerned in tech selections. That leaves about 3 in 4 CFOs who aren’t fully happy with the outcomes of their legacy tech investments or who don’t assume that IT investments are tied to enterprise targets.
Actually, many CFOs have scathing suggestions when requested about organisational know-how. Amongst surveyed CFOs:
- 29% have seen solely combined outcomes from tech investments, when measured towards attaining desired enterprise outcomes or gaining enough long-term worth.
- 19% say they typically see a detrimental impression from know-how investments, together with ongoing prices, restricted future flexibility or enterprise disruption.
- 17% surveyed by Censuswide for Rimini Avenue say that a lot of the organisation’s know-how investments are usually not tied to their enterprise targets.
- 12% have seen little or no enterprise enchancment from their know-how investments, and/or the price of the funding outweighed the worth of the advance.
Stronger CFO and CIOs relationships are benefiting companies
Regardless of some CFO dissatisfaction, 94% of respondents mentioned the CFO and CIO relationship has strengthened considerably or barely. It is a giant share contemplating the CFO is more and more encroaching on a few of a CIO’s conventional duties.
CFOs seeing CIOs in a extra optimistic mild
Nearer collaboration is tipping CFO notion of CIOs towards the optimistic. The survey discovered:
- 39% of CFOs thought of their CIO as an “innovative change-agent who drives business strategy.”
- 33% see their CIOs as companions who assist join the dots between tech and enterprise selections.
Rimini Avenue mentioned these talent units transcend the core know-how energy of most IT execs.
“It speaks to leadership and collaboration more so than technology proficiency, indicating at least on the CIO side, they are learning the CFO’s language,” in line with the report.
Why the CFO-CIO bond is rising stronger
An unsure enterprise atmosphere has been an element within the strengthening relationship between CFOs and CIOs, as they’ve been required to work carefully collectively. In line with the Rimini report, a number of the causes nominated by CIOs and CFOs for the stronger bond had been:
- The opposite chief proactively participating (39%).
- A concentrate on safety, compliance and danger (38%).
- The pressing must collaborate to make nimble know-how selections (37%).
- The necessity to shortly lower IT prices in a wise approach (35%).
Rimini Avenue mentioned CFOs stay depending on CIOs due to the complexity of IT selections and need CIO steerage with priorities rooted in know-how, comparable to safety and rising applied sciences. CIOs wish to CFOs to help them with price range and government advocacy.
CFOs imagine nearer collaboration with CIO is nice for enterprise
Greater than half of CFOs within the ANZ area (55%) imagine a optimistic CFO-CIO relationship has been instrumental to higher enterprise outcomes. A major 41% assume the partnership contributes, even when it’s not the primary driver of bettering enterprise outcomes.
CFO and CIO enterprise relationships nonetheless have room to enhance
The CFO and CIO relationship can nonetheless enhance. For instance, each CFOs and CIOs assume the opposite ought to higher perceive their self-discipline:
- A big share of CFOs (91%) indicated that their CIO counterpart must be extra business-savvy to higher talk with them.
- A mixed 96% of CIO respondents indicated their CFO counterpart must be extra technology-savvy to enhance communication with them.
Why CFO and CIO relationships go unhealthy
A small share (6%) of CFOs report having a worse relationship with their CIO. Amongst these CFOs, 38% attributed the problem to a lack of understanding in addressing safety, compliance and danger points, whereas one other 38% cited the CIO’s inflexibility in figuring out methods to chop IT prices.
Different causes for CFO dissatisfaction included CIOs demonstrating a irritating lack of urgency (23%), presenting plans that didn’t reveal enough return on funding (23%), or not welcoming extra proactive engagement (23%). These points point out that each expertise and dealing types might each be relationship flashpoints.
How IT leaders can higher interact with their CFOs
Savvy IT leaders have the potential to higher leverage blossoming CFO relationships to advance the pursuits of IT throughout the organisation — notably relating to budgets and funding.
Get used to working extra carefully with CFOs
IT budgets are increasing as a share of total income, with 79% of respondents to Rimini Avenue’s report saying they’re growing. As IT balloons in significance, each when it comes to value and as a business-value driver, CIOs ought to anticipate elevated involvement and scrutiny from CFOs.
SEE: 4 confirmed methods to broaden your worth as a CIO in 2024
Rimini Avenue added that CFO dissatisfaction with tech investments might result in elevated involvement.
“This [CFO dissatisfaction] is a clear signal for CIOs to expect a heightened level of collaboration with their business counterparts, as well as to prepare for increased oversight to ensure that their tech choices are driving business value,” the report mentioned.
Examine how CFOs assess know-how selections
CIOs can profit from higher understanding how CFOs assess the benefit of latest know-how investments. As anticipated, Rimini Avenue discovered CFOs are extra centered on the monetary impression of investments. The highest 5 elements thought of by CFOs in tech investments are:
- The strategic worth to the enterprise.
- The sustainability of the know-how answer.
- Anticipated return on funding.
- Ease of upkeep and assist.
- CAPEX and OPEX issues.
What CFOs need CIOs to concentrate on
CFOs could have completely different concepts about what CIOs ought to concentrate on. For instance, the analysis discovered CFOs need CIO priorities to incorporate danger administration and compliance, buyer success and engagement, main ERP reimplementation and migration, and revenue-generating know-how.
CIOs could have a unique opinion from their CFO when discussing technology-related selections — particularly given the significance of danger administration and compliance for CFOs. However Rimini Avenue mentioned CIOs could be assured that, on the entire, CFOs are pushed extra by outcomes and return on funding than they’re by the know-how itself.
Go simple on ‘shiny toys’ and rising applied sciences
CIOs are largely enthusiastic about rising applied sciences: 64% of CIOs surveyed are already investing in synthetic intelligence, whereas an extra 28% plan to take a position this yr. Nevertheless, they do perceive the have to be cautious, with 34% saying they’re solely supplementing current enterprise know-how fairly than investing in new improvements.
SEE: 3 greatest practices for CIOs utilizing rising know-how for enterprise outcomes
This warning might additional assist the CFO-CIO relationship. Rimini Avenue discovered that CFOs weren’t essentially against the introduction of rising applied sciences, however they indicated they wish to guarantee they get the utmost worth from new know-how.
CFOs keen to assist CIOs with future IT budgets
CIOs stand to profit from the rising collaboration with CFOs. The report discovered that, if a CIO was to strategy a CFO with an inexpensive IT funding proposal that might reveal ROI, 23% of CFOs could be keen to strategy the board to safe the required funding.
This bodes effectively for CIOs into the longer term. With a necessity to stay agile and spend money on new applied sciences like AI to maintain companies aggressive, assist from CFOs and a robust relationship basis could possibly be the fulcrum for future enterprise success.