In today’s fast-changing business world, organizations are looking to their CIOs to help prepare the enterprise for an uncertain future. CIOs must equip their organizations with the tools and skills to act and pivot with speed and accuracy. And they must leverage and operationalize data to create new value.
Our survey of senior finance and IT leaders—“The CFO-CIO Relationship: The Path to ERP-Enabled Finance Transformation”—found that as IT has moved from a cost center to a value creator, the role of the CIO likewise has evolved.
“The last two years have changed the way we’re thinking—about customers, about partners, about employees,” says Ernesto Boada, interim CIO at Workday. “IT organizations need to change the way they operate. We must be a partner and a product organization. We deliver products, capabilities, and features that enable business.”
But most IT leaders say their legacy enterprise resource planning (ERP) systems just aren’t up to the task. In fact, 65% of CIOs believe their ERP systems are not flexible enough to meet the needs of today’s business environment, according to the survey.
Forward-thinking CIOs see a challenging business climate as an opportunity to rethink their traditional ERP environments. New and agile technologies streamline IT functions and deliver greater visibility to CIOs. According to IT leaders, the benefits of digital finance transformation include:
- Improved procurement and sourcing (43%).
- Tools that streamline financial close, consolidation, and statutory reporting (26%).
- Automation of low-value tasks, freeing up finance employees’ time (24%).
But to achieve digital finance transformation, CIOs recognize they must collaborate and align with CFOs—balancing IT’s goals of simplicity and agility with the ever-expanding scope and complexity of finance. This alignment is central to future business success.
Finding Common Ground
Organizations that attain a high level of IT-finance alignment are reaping the rewards. These highly aligned organizations are more likely to have developed and deployed a digital finance strategy in the past two years, compared to those with low IT-finance alignment (37% to 31%). In 57% of highly aligned organizations, IT regularly advises on emerging technology for finance (compared to 44% of organizations with low alignment).
In almost one-third (31%) of organizations, however, IT and finance are rarely or never aligned. These organizations are twice as likely as their peers to report they have not yet developed a digital finance transformation strategy (22% compared to 11%).
Before CIOs and CFOs can achieve alignment and digital transformation, some significant hurdles have to be cleared. Two such hurdles? Time and funds. While most CIOs say their ERP systems can’t meet today’s business requirements, over half (54%) say they don’t have the time needed to modernize their ERP systems. And 41% say that limited time, budget, and/or resources hamper their teams’ ability to simplify legacy finance systems and eradicate technical debt.
Talent is another hurdle—specifically, ensuring IT team members have the financial expertise they need. To successfully deliver digital finance transformation, IT talent must develop its financial literacy skills.
Indeed, CIOs say financial literacy is the second most important skill that IT teams need to support digital finance transformation. While 37% of CIOs say the most valuable skill for such transformations is data and analytics, 26% say it’s financial literacy (tied with regulation and compliance). Over two-thirds (69%) of CIOs agree their teams are under pressure to innovate finance technology despite limited financial literacy. And only 44% are confident their teams have the skills needed to keep pace with new and emerging finance technology.
To realize the full benefits of digital finance transformation, CIOs must:
Exploit data to deliver new value to finance teams. Only 46% of IT and finance leaders say they now have the systems required for finance teams to make accurate decisions at speed. This represents a huge opportunity for IT.
Ensure IT and finance align on technology decisions. In almost half (44%) of organizations, IT and finance rarely align on the value drivers for new technology investments. For that to improve, CIOs need to have a seat at the table during critical finance meetings.
Develop a collaboration with finance. CIOs need to ensure their teams have the right tools and skills, so they can be financially literate. If finance and IT can partner together, they can work toward shared business results.
To learn more about the state of digital finance transformation and how it impacts the relationship between finance and IT, download “The CFO-CIO Relationship: The Path to ERP-Enabled Finance Transformation.”