Our latest global survey of senior finance and IT leaders tracks the state of digital finance transformation in today’s organizations, and details why CFO-CIO alignment is central to success.
For successful digital transformation of the finance function, CFOs and CIOs need to start speaking the same language. This is what our latest global study— “The CFO-CIO Partnership: The Path to ERP-Enabled Finance Transformation”—shows, as well as a gap in how trustworthy CFOs and CIOs consider their data, and opposing goals when it comes to technology modernization.
Conducted in partnership with Longitude, a Financial Times company, the research also shows that there is a positive correlation between the level of alignment of a company’s finance and IT teams and the progress of its digital finance transformation. Conversely, we found that in 31% of organizations, finance and IT are rarely or never aligned. What’s more, CFOs also say that a lack of alignment between finance and IT teams is a top barrier to digital finance transformation.
As Barbara Larson, Workday CFO, shared recently: “Finance has to be careful not to shut down new technologies that we don’t understand. On the other hand, finance must articulate to IT what we want. And then we’ve got to work together to drive that.”
57% of CIOs agree that their aim to eliminate IT complexity is directly at odds with the expanding scope of the finance function.
For CIOs, it’s crucial to move beyond the role of technology provider into that of strategic partner, as Workday’s interim CIO Ernesto Boada explains. “The success of finance, or any business unit, is our success as well.”
The research, with 1,060 senior finance and IT leaders around the globe (plus 10 in-depth interviews), makes the case that if IT and finance are to find common ground, they first must bridge what the report calls the “data confidence gap,” the skills gap, and the technology gap.
On the data confidence gap, the research finds that CIOs (57%) are generally confident about the usability of their organization’s data, but that CFOs are not. In fact, half of CFOs (50%) say they continue to make financial decisions based on gut instinct—despite having the data they need—because it is siloed, not in the right format, or not readily available to them. And 53% of CFOs say that limited or outdated information hampers their team’s ability to make accurate forecasts.
Ownership of a data strategy can also become a sticking point, says Larson in the report. “One of the things that finance increasingly owns is the data strategy or data model, as well as the business strategy. But we can’t do that alone,” she explains. “It’s absolutely critical to have that partnership with IT to drive that data strategy, which will fuel the business strategy.”
54% of CFOs say their legacy ERP systems are not flexible enough to meet the needs of today’s business environment, and 65% of CIOs feel the same.
The skills gap refers to a problem that is simple to state but hard to solve: Finance and IT need to learn each other’s language to more quickly find common ground. For CIOs, a lack of technology and data literacy skills within the finance team is the second biggest barrier to digital finance transformation. CFOs, meanwhile, say that a lack of financial literacy skills within IT is their biggest barrier to digital finance transformation progress.
“IT teams are asking for finance people to be more tech-savvy, to understand solutions and provide quicker decisions,” says Steve Bayssat, head of international finance shared services at Applus+, in the report. “But IT teams are also switching away from the traditional systems’ maintenance and ownership that they had before to a more strategic role.”
The technology gap is really the story of how legacy technology wasn’t built for the modern speed of business. One of the most interesting points the research uncovered—and in our opinion, the crux of most CFO-CIO difficulties—is that 57% of CIOs agree that their aim to eliminate IT complexity is directly at odds with the expanding scope of the finance function. Meanwhile, 41% of CFOs admit that their CIO does not have a seat at the table during critical finance meetings—even when technology is essential to solving a challenge.
Legacy systems are a challenge for all business functions, but it is particularly difficult for IT to reconcile existing enterprise resource planning (ERP) systems with the need to implement more flexible technology solutions. Out of the CFOs we surveyed, 54% say their legacy ERP systems are not flexible enough to meet the needs of today’s business environment, and 65% of CIOs feel the same.
It’s important to note that CIOs want to deliver transformative change, but they are constrained by resources. To wit, 54% of CIOs say that ERP modernization is critical but they do not have time to undergo such a sizable transformation, and 41% agree that limited time, budget, and/or resources hamper their team’s ability to simplify legacy finance systems and eradicate technical debt.
Although the challenges loom large for both CFOs and CIOs, the report includes recommendations from business leaders on how finance and IT can get aligned to move the business forward.
Download the full report, “The CFO-CIO Relationship: The Path to ERP-Enabled Finance Transformation,” for finance leaders and for IT leaders. Or, visit our digital experience for industry-specific findings and other insights.
More Reading
The next generation of grocers are constantly adapting to their customers’ needs. Value pricing, smart planning, and leveraging technologies such as AI are all key to an incredible consumer experience.
From tight staffing levels to the public’s expectations for digital experiences, government agencies are dealing with a lot. That’s why they’re embracing new technologies and approaches, such as AI for productivity improvements and skills-based talent management.
Creating timely, accurate, consolidated, and easy-to-digest reports doesn’t have to be a painful experience for FP&A teams.