The changing role of the cfo


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Descreve as características da mudança de paradigma do setor de TI, e as tendências para o futuro do setor.

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The changing role of the cfo

  1. 1. The ChangingRole of the CFOA research report by GetronicsFebruary 2012
  2. 2. Executive summaryThe “Changing Role of the CFO” research examines current views on IT from the point of view of senior financeprofessionals working in the UK. Large organisations are currently seeing two trends meeting head-on, theincreased financial scrutiny of internal costs at all levels is connecting with new technology solutions that favourservices over internal IT provision. Many finance professionals would argue that this technology developmentoffers significant cost savings, but how accurate is their perspective on IT? Moreover, as they become moreintegrated into IT decision making, what is the impact on the CIO role itself? The key findings from the research are:• Businesses are seeking to improve their savings in all business The changing role of the CIO areas including IT, however there is clear recognition that • 17% think that the role of CIO will disappear altogether within technology has a key role to play in overall business improvement five years• The decision-making process around both IT and Finance has • It’s clear that financial teams are more involved with IT grown closer, elevating the CIO‟s corporate accountability and purchasing decisions with 77% claiming greater overall exposure at board level. A consequence of this is the creation responsibility. Meanwhile 48% believe there is a trend towards of the belief that the role of CIO will change considerably over the greater integration when it comes to IT and Finance next 3-5 years • 43% believe that the CIO role will merge with the CFO role• Cloud adoption by companies has seen a large, general involvement of finance personnel, who recognise there are • While 39% believe that senior finance teams have a good potential growth opportunities and cost savings to be made understanding of strategic IT, 35% want to see an improvement• IT needs to deliver a tangible return on investment, but in turn ‘Finance’ requires an improved understanding of strategic IT Cloud on the horizon needs and function. Addressing this imbalance could improve • Finance is getting closer to the decision process around Cloud operational efficiency and ROI over several years ahead adoption, with 77% acknowledging involvement in cloud-based IT decisions (38% directly involved after initiating a cloudIT trends solution, and 39% directly involved after IT had initiated it)• 53% of respondents see the improvement of long term • 60% of respondents see a trend towards services and away operational efficiency as a key priority in 2012 from licence based IT spend• 64% of CFOs believe that the maintenance of the IT infrastructure • It’s clear that Cloud is associated with positive business is a key concern in managing IT costs change. 36% saw savings as a reason for Cloud adoption, the remaining 64% associated it with improvements to• However, 48% of respondents agreed that technology was operations and increased delivery and response speeds a key driver behind change and improvement The ROI of IT investmentResearch Methodology • The majority of businesses (71%) perceive a strong ROI in IT203 senior finance professionals in UK organisations employing investment. However, only 19% can actually demonstrate clearover 500 people participated in an online survey during January ROI on all IT investments over 2-3 years2012. The research was managed by Loudhouse, an independentconsultancy based in London. • 54% of respondents have seen a reduction in their IT spending over the past three years in relation to growth > 50,000 501 – 1000 • 75% of respondents express a desire to show clear ROI on all, 12% 6% or the majority, of IT investment within the next 2 years20,001 –50,00011%10,001 – 1,001 – 10,00020,000 54%17%Q. How many staff does your organisation employ in total? Base: (203)
  3. 3. IT Trends The changing role of the CIOStrategic priorities across businesses have continued to focus Fig 1: Cash flow, working capital and improving operational The economic pressures exerted on businesses, due to the Fig 5: Finance has gained greater responsibility for IT purchasingon operational liquidity and greater efficiency. 56% believe that efficiency are main priorities for 2012 recent global downturn has seen finance teams more closely decisions in last 1 – 2 yearscash flow and working capital management are a key priority Cash flow and working capital involved with all areas of an organisation, including IT. 77% of(understandably). As well as thinking in the “now”, companies Improving long term operational respondents replied that there was a greater responsibility being Don’t Know 6%are also looking towards the future, with 53% seeing long term Increasing profits and top line Planning, budgeting, and revenue taken on by Finance in the past 1-2 years relating to IT purchase Nooperational efficiency as a key factor. This is a promising outlook Reducing overall purchasing costs decision making (Fig.5). Interestingly, Finance also believes the 17%for primarily economic reasons, but will affect IT’s working Maintaining or improving margins role of the CIO will disappear altogether in the next five yearspractices and move the focus on to their need to adapt. That Risk analysisonly 40% see the upgrading of legacy systems as a priority Investment in technology to upgrade (17%), with 14% undecided. Regulatory complianceindicates the shift in thinking away from maintaining current Environmental practices Collaboration between departments is a fundamental businessinfrastructures. Increasing profits/top line performance and Accessing credit Improving short term operational requirement, but the research suggests a shift beyond workingreducing overall purchasing costs remain key business priorities Other together into full integration. The perception of the finance teams Yes(52% and 47% respectively) and should, of course, have a direct 77% is that the trend towards integration is increasing (48% agreed).impact on technology deployment and servicing. Q. Which of the following would you say are main priorities for your organisation in the coming 12 months? Total (203) Intriguingly, 35% felt that there was a decreased level ofThis requirement for IT teams to evolve is keenly felt by CFOs. integration, while 15% felt there was no discernable movement. Q. In the last 1-2 years do you think you (and your organisation’s FD/CFO) have gained64% think that the maintenance of the IT infrastructure will be It is possible that the decreased level of integration could be greater responsibility when it comes to making IT purchasing decisions? Total (203) Fig 2: The cost of infrastructure maintenance is a sourceof great concern. Large IT teams and legacy systems drive high representative of the protectionist silo behaviour discussed of concernexpenditure in businesses and many seek to address this. in Fig 3. A fear of encroachment that could prove detrimentalInterestingly, 48% see spend on outsourced consultancies as Maintenance of IT infrastructure Fig 6: CIO job role changes to an organisation’s effectiveness?being a worry too. This represents another shift in thinking about Spend on outsourced consultancy CIO will have more responsibility at Board levelinfrastructure: the consultancy needs to come from the CIO role, Licence payments for software use An increase in integration and a closer focus on IT from Finance Capital expenditure on hardwarebeing closer to financial concerns, while the functionality of the will impact on the CIO’s role at a board level. As shown in Figure 6, CIO will have greater integration with CFO role Hosted servicesIT service can reside externally. Expenditure on software licences Over the course of the next five years 47% think that the CIO will CIO will be accountable for more spend in the business In-house resource costs (staff)and hardware are of less concern (47% and 44% respectively), CIO is more likely to come from a non-technical background have more responsibility to the board. 43% agreed that the CIOrepresenting a conscious decision to move away from these Q. As a finance decision maker with visibility of this spend, select the three areas that generate CIO role will merge with other operational roles will have greater integration with the CFO role, while 17% statedinfrastructure needs. Meanwhile, only 20% saw hosted services greatest levels of concern, in terms of costs, for you. Base: Total (203) CIO role will no longer exist due to reduced importance of in-house IT that the role could merge with other operational a concern, which could represent a move towards thisrequirement. The same percentage also acknowledged that staff 31% thought that CIOs were less likely to come from a technical CIO will be responsible for energy consumption in the businessresourcing was a concern, which suggests that finance teams have Fig 3: Technology is a driving force for change and improvement background. Accountability for spend is a key CIO role requirement Don’t know / Refusedvery clear thinking on the issues of in-house of team resource. Strongly agree Agree Neutral Disagree Strongly disagree Don’t know (41% agreed) and indicative of Finance’s more focussed Other approach. 11% predicted that the CIOs role would begin toThough finance teams clearly pay heed to the infrastructure The threat of redundancy through increased outsourced / Q. In what ways do you think that the CIO role will change within your organisation over the hosted provision of IT results in IT departments creating encompass energy consumption measurement and regulation.requirements and operational costs of IT, they also recognise that silos in the business to protect IT ownership next five years? Total (203) This would see a shift not only in the level of responsibility beingtechnology can be a substantial force for business change and Without clear integration to the finance function, required, but also the key savings areas that Finance would beimprovement. 81% agreed that IT innovation can prompt effective IT Directors and CIOs can hinder business developmentchange. (Fig.3). The prospect of change within IT’s strategic outlook and limit the impact of IT on cost savings looking to regulate.and decision making is clearly a worrying one. 54% think that the Within our organisation, the IT and finance functions are This research above reveals how far the range of Financial tightly integrated and aligned at a strategic levelthreat of redundancy will see IT teams retreat into silos and have thinking is progressing across an organisation, with thea very protectionist stance. Of more concern is the belief that Technology is a driving force for change and improvement landscape of infrastructure altering to accommodate thewithout clear integration between CIOs and finance teams, real within our organisation technological damage will occur (56% agree) with a negative impacton IT cost savings.If the worries over infrastructure change and maintenance spend Fig 4: IT provides considerable return on investmentconcern finance teams, then this does not appear to have affected Strongly agree Agree Neutral Disagree Strongly disagree Don’t knowthe opinion that IT still provides a great return on investment There is a trend in our organisation away from product(71% agree, Fig.4). This appears to be because the technology licences and hardware (capital expenditure) towards IT services, hosting and outsourcinghas enabled reduced capital expenditure which means the ROIcan continue to deliver, despite challenging economic conditions. IT within our organisation is recognised by the business as56% agreed that (relevant to growth) the level of spending on spend that provides considerable return on investmentIT had indeed been reduced. This correlates with a clear trendaway from licences: organisations are moving away from product Over the past three years we have, relative to growth, reduced the level of spending on IT within our organisationlicences and hardware expenditure and moving towards hostedand outsourced IT services (60% agreed).
  4. 4. Cloud on the horizon The ROI of IT investmentThe past two years has seen Cloud become the key catalyst Fig 7: Finance is generally involved in the decision-making While IT teams have their own priorities to manage, the overriding Fig 9: 33% believe IT improves operational efficiency,for infrastructure reappraisal and enablement of technology process around Cloud goal must be meeting business needs that benefit the whole 21% see it reducing costssavings. The term Cloud itself remains a contentious and fractured organisation (Fig.9). The role that IT plays, however well No, notone, however the broad understanding that implementing a Cloud involved scrutinised by finance, is recognised as having benefits that Secure company information andbased solution will boost efficiencies and make significant savings at all Don’t Know meet these business needs, often with the emphasis of driving prevent malicious Yes – involved, 2% 1% attacksmeans that Finance teams have taken a keen interest in how but only to a company forward. 33% thought that IT teams were improving 10% Reduce costs a small degree for the businessIT has approached this subject. 20% operation efficiency, 19% believed they drove innovation Net 21% Defenders and created top-line growth while 17% thought they increased Increase theFinancial involvement with Cloud related projects has largely productivity Yes –directly employee productivity. Around a fifth saw the major benefit as of employees Bottom-linersbeen direct. 39% of finance teams were involved once IT had People involved and being cost reduction (21%) while 10% saw the security benefit 17% Juicersraised the proposal (Fig.7), while 38% had been directly involved initiated the Yes – project as being paramount. If organisations believe that IT has all thesefrom the project‟s initiation. It’s clear that there’s an excitement 38% Innovation directly benefits, how tangible are they in reality? Can the return on Drivers Streamlinersand “buzz” around Cloud from the Finance team which sees the involved once Improve operational IT raised the investment actually be proven? Drive innovation efficiencyteam actively engaging with IT to push projects forward and add proposal and create top 33% line growthCloud services to the list of projects being undertaken. This could 39% Only 19% of respondents believed they could show ROI on all 19%be seen as both a positive or negative step with CFOs possibly IT investment and implementation over the past 2-3 years, whilekeen to take a Cloud solution without a full understanding of how Q. When your business adopted a cloud model for some or all of its IT delivery, were you 42% believed most could show this and 24% thought this was Q. What from the following best describe the role of IT within your organisation? Total (203) (or the head of finance) involved directly in the process? Cloud Users (172)it fits into the wider IT strategy of the business. Enthusiasm true in some cases (Fig.10). 8% believed there was significantthough does not always equate with understanding. ROI seen in the minority of cases. Measuring internal IT performance for ROI can, of course be tricky. Interestingly one in 10 (11%) Fig 10: Current ROI capabilitiesOnly 2% of Finance heads admitted they “were not aware Fig 8: Reasons for Cloud adoption believe ROI is not a focus for IT heads and is therefore forgottenof the term cloud computing”, whilst the majority were able It would be or not tracked. It’s far easier to have a Service Level Agreement difficult to showto provide a meaningful description of its use. For example Operational and Cost savings with agreed Key Performance Indicators that your service clear ROI on20% of financial teams identified the Cloud as a standardised maintenance any of our IT cost savings on overall IT provider will need to meet and agreeing these internally. The investment overIT capability delivered via the Internet. 26% believed rather expenditure ROI can only Don’t Know Improves our 9% 14% setting of KPIs for IT teams internally by finance would seem to the past 2-3 yearsthat it was IT delivered as a Service to reduce reliance on in-house ability to drive be shown on IT 4% 3% top line be a methodology change aligned with CIOs having more board investment and Clear ROI can be shown oninfrastructure. 33% crucially saw the Cloud as accessing IT Better cost savings implementation all IT investment and implementation performance through a utility-based level responsibility. That 93% saw any ROI from IT at least reflects over the past over the past 2-3 yearsservices from outside the business via the internet, which and growth 13% model where we only the positive outlook that finance has for IT. 2-3 years 19%although provides a reasonable description of public Cloud, it pay for what we use in a minority 13% of casesfails to recognise the potential for private and on-premise Clouds. Despite this, finance teams will always look for improvement 8% IncreasesBeyond a top line understanding there is a knowledge-gap that our ability in ROI. 49% believed that they would see an increase in ROI ROI can be shown on most IT deploy new Increases the speed ROI can be investment and implementationIT teams must address to help finance teams better define technology of IT delivery to our business on most IT investment and implementation over the next 1-2 shown on some over the past 2-3 yearsongoing strategy. and services 13% years. Just over a quarter believed that the ROI would improve IT investment 42% quickly and easily and implementation 14% in all cases, while 20% believed it would only be in some. over the pastActual Cloud usage in business varies, as might be expected Increases level Improves IT service to the wider This would appear to be a further indication of the encroachment 2-3 yearsfrom a relatively new model such as this. A quarter of respondents of agility where organisation (support) 24% our business can 11% and integration that finance will bring to IT, watching budgetsbelieved that Cloud services accounted for a small part of their respond quicker to and suggesting alternative services. Q. In terms of measuring the return on investment your business achieves through IT spend,IT use, while the majority (44%) acknowledged that some aspects organisational change 13% what from the following best describes the current situation? Total (203)of IT were delivered in this way. 18% stated that the majority If this is to happen though, finance needs to get to grips with ITof their IT infrastructure was originated from a Cloud model. Q. What are the reasons that your organisation has adopted a cloud model for some or all strategy in a greater capacity than ever before. 40% surveyedBusiness adoption of Cloud therefore seems to be progressing, of its IT delivery? Those with cloud in use (172) thought that there was some need for improvement in thealbeit at a moderate rate. understanding of IT strategy from senior finance teams. 39% believed it was good, 18% thought very good, but there is a clearFor finance teams the reasons for this adoption seem realisation that better education and involvement is required tostraightforward. 36% cited savings (Fig.8), whether because bring both teams into clear alignment on IT strategy. If not, theof operational cost reduction (9%), less expenditure overall (14%) consequences may directly affect those perceived ROI benefits.or a pay-per-use model (13%). Conversely other reasons statedrelated to improved efficiencies over speed of delivery (13%),wider organisation support (11%), increased agility in respondingto organisational change (13%) or the deployment of newtechnology (14%). 13% saw it directly affecting the ability to drivetop-line performance and growth.
  5. 5. SummaryFinance and IT departments are now set on a course of Collaboration and mutual knowledge-sharing are thereforecollaboration and consolidation previously unseen in the working keys to a successful future. This will require new skill-sets,world. Presenting a new set of tensions and challenges, this perhaps different personnel, but almost certainly a newprogression will require understanding from both sides in order outlook. An open mind may well prove to be the most importantto reduce costs, make savings, innovate and implement positive business asset both teams could possess. The intriguingorganisational change. With return on investment being the key catalyst of ‘the cloud’ as the enabler of this change indicatesfactor of finance teams measuring IT’s business effectiveness, how transformative technology can be, both directly andit’s important that there is greater strategic understanding from indirectly.both sides. The opportunities for service-led IT are numerous andThis path to collaborative working will not always be smooth. will directly impact bottom-line sales and top-line growth.There is a temptation for IT to safeguard its old working models Understanding that new landscape is a challenge, howeverand silo its activity. For those with an overview of the business one that is too great, not to accept. The risk resides in stayingthis will be counter-intuitive. Management of new, innovative exactly where you such as SaaS or PaaS provision will require input fromboth IT and finance. Firstly, to see the operational innovationthat can be gained with the potential for growth and secondly,to understand the savings that will come with a migration toservice-based delivery models.Every business will be different and the development of thisnew model will be addressed at different speeds. In somecases, the collaboration of the finance and IT teams will begreater than in others and it remains to be seen how that willimpact business change. What is clear however is that withoutthis clear integration, the perception is that CIOs and IT directorsrisk being distanced from the decision making ‘engine’ andfocusing more on delivery.
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