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The value of data and analytics to business success is already well established: from global post-pandemic recovery to the looming recession, the business playing field has changed rapidly and intensified the need to optimise operational costs whilst also innovating and building for the future.
With rising costs and fewer resources, now is the time for businesses to ensure that they are managing IT costs effectively – not just in terms of cutting, but also optimizing, investments, and reinvesting in the tools and technologies that can and will enable them to drive the wider business strategy. In our current – extraordinary – times, it is hard to overstate the benefits of data acquisition and management across the enterprise, and the application of that insight to all business decisions.
Value and contribution as well as cost and efficiency
When considering the topic of financial management, there is a tendency to think cost control. While it is clearly important to optimize the growth and profitability of a company, businesses also need to ensure that funds and resources are well spent to invest in innovation. According to a recent study conducted by CIO WaterCooler, more than three quarters (78%) of CIOs focus on IT Financial Management (ITFM) to ‘ensure IT-related investments have maximum business impact’ while just under half (48%) view evidencing ROI across the project portfolio as a key driver.
While more than two out of five (42%) of CIOs recognize reinforcing IT as a revenue enabler not just a cost-centre as a big driver, significantly, almost two thirds (64%) see freeing up time/budget for new developments as a secondary driver for ITFM. This research highlights that against the backdrop of major economic and geopolitical disruptions, business and IT leaders are coming to recognize that they can’t save their way to future success but there is further work to be done to ensure that organisations reap the full rewards of ITFM. Digital and business transformation are critical, which in turn shines a spotlight on technology and underscores the role of IT as a strategic business enabler.
Going hand in hand with this is a recognition that smarter ITFM can help raise IT’s credibility with business stakeholders and reinforce its position as a revenue enabler, not just a cost saver. The aim is to set aside any initial views of IT as simply a cost centre and get it working as a trusted and integral part of the overall business strategy. Failing to effectively communicate how ITFM enhances the broader business functions can lower its perceived value and create resistance.
Increasing focus on collaboration between the CIO and CFO
Cutting costs and fostering transparency is more complicated than just selecting one of the many software tools on the market. Alignment and collaboration between CFOs and CIOs is critical to empowering organizations and ensuring that implementation of the tools is used effectively across the business. ITFM tools for enterprise services are vital in enabling businesses and leaders to gather vital analytics, real-time operational, project and vendor cost data – in essence, to uncover the truth around IT costs which in turn provides a plethora of data and insight into business operations. These tools enable fact-based scenario planning, and, in turn, help ensure that innovation and digital strategies take centre-stage in optimizing services and refining processes – whilst adding value.
It’s important to recognize that beyond technology, a strong partnership between the CIO and CFO is seen as critical given the need for policy and process related transformation. Transparency enables the CIO and CFO to gain buy-in from the board and the rest of the leadership team when sharing their vision and proposing business changes. This also gives them a clear line of authority and the agility needed to drive a direct steering model, supported by accurate understanding of cost, value and optimization potential. It’s been reported that the overwhelming majority of CIOs agree (94%) that a strong partnership between the CIO and CFO is critical to maximise ongoing business impact. Investment decisions made on this foundation deliver substantial returns for the business, enabling them to shift costs and save in a way that best matches their goals for the company.
A data-driven transformation for future success
Financial management has always been integral to IT leadership, with responsibility for selected parts of budgeting and tracking usually also delegated to those running programmes, projects, and functional units within the IT organization. The trouble is that accounting for spend is all too often viewed as a chore or a ‘necessary evil’. The emergence of smart, specialist ITFM tools and platforms, however, represents an opportunity to adopt a different mindset. By adopting finance management solutions in this holistic and data-driven way, innovation can indeed be the answer to enterprise demands – and the CFO’s needs – in these challenging times.
More information about the CIO watercooler findings is available here