In the current competitive business landscape, IT leaders are under significant pressure to ensure that their technology investments generate tangible returns and drive the growth of their organizations. Gone are the days when IT projects could be approved based solely on promised capabilities or state-of-the-art features. In today’s environment of heightened scrutiny, Chief Information Officers (CIOs) must closely collaborate with their Chief Financial Officer (CFO) counterparts to demonstrate the measurable value and profitability gains from each technology initiative.
A recent global survey of close to 3,000 CFOs and CIOs, conducted by Censuswide on behalf of Rimini Street, has underscored the increasing emphasis on return on investment (ROI) from IT expenditure. The study highlighted the growing partnership between these two C-suite roles, driven by the mandate to scrutinize technology budgets and ensure that they align with overarching business objectives.
According to the survey findings, an overwhelming 86% of respondents acknowledged that the relationship between CFOs and CIOs has deepened over time. This collaborative dynamic is reshaping how IT investments are considered, with 72% of CFOs taking the lead in setting technology budget levels and 41% of CIOs stating that their finance counterparts make the underlying technology decisions.
The intensified involvement of CFOs is warranted, as nearly half (49%) of the CFO respondents attributed improved business outcomes to the positive CFO-CIO partnership.
Collaborative efforts by CIOs and CFOs to address escalating IT costs are also underway. The survey unveiled that 44% of CIOs are investing in emerging technologies, such as AI and data analytics, to streamline operations and unlock new revenue streams. However, a staggering 94% acknowledged the need for substantial data clean-up efforts to maximize the value of their AI projects for enterprise resource planning (ERP) systems.
Additionally, 36% of CIOs are looking to outsource application support as a cost-effective solution. Leveraging third-party expertise allows organizations to benefit from support for customizations (33%), broader service offerings (33%), improved quality of service (32%), and faster issue resolution (30%), all while potentially reducing costs (26%).
Despite their best intentions, not all technology initiatives are delivering the desired value for businesses. The survey revealed that ERP upgrades or migrations were considered the least valuable investments by 23% of CFOs, underscoring the need for CIOs to carefully evaluate the short and long-term impact of their technology strategies, as only 20% of CFOs expressed satisfaction with the results of their technology investments.
To tackle this challenge, organizations are increasingly turning to innovative support models that extend the lifespan of their ERP systems, enabling them to reallocate resources towards strategic initiatives and innovations that drive growth and profitability.
As the business landscape evolves, the demand for IT investments to deliver tangible ROI will only grow. By fostering a strong CFO-CIO partnership, organizations can navigate the complexities of technology budgeting, prioritize high-value initiatives, and ensure that their IT investments directly contribute to their bottom line and long-term success.
Commenting on this issue, Rimini Street CFO, Michael Perica, mentioned, “Thousands of clients of Rimini Street who have maximised the value of their significant ERP investments also benefit from the flexibility and freedom to innovate with best-fit solutions for their needs, on their own timeline. It’s not just about the US$8bn we’ve saved our clients to date; we’ve helped them reallocate their people, time, and money towards strategic initiatives and innovations that accelerate growth and profitability for the business.”
Overall, it is crucial for IT leaders to recognise the growing need for delivering ROI from their technology investments and to work in tandem with CFOs to ensure that IT expenditures directly contribute to the organisation’s success.