Our latest survey of more than 1,000 senior finance and IT leaders provides insights into how organizations can supercharge their finance transformation efforts—and ensure they succeed.
CFOs and CIOs must align more closely on digital finance transformation goals in order to succeed in their efforts, according to our latest global study “The CFO-CIO Partnership: The Path to ERP-Enabled Finance Transformation.”
Conducted in partnership with Longitude, a Financial Times company, the survey of 1,060 senior leaders found a positive correlation between how well a company’s finance and IT teams are aligned and the success of their digital transformation initiatives. The collaboration needed for organizational success is more important than ever given the pandemic-related disruption of the past several years. CFOs are also navigating economic uncertainty, supply chain issues, and talent shortages, as well as growing environmental, social, and governance (ESG) concerns.
“CFOs today are required to provide more than just financial insights,” Barbara Larson, Workday’s CFO, said in a recent podcast. “They’re required to provide insights that can drive operational change and guide business strategy, and ultimately provide long-term value to stakeholders. And what’s critical in finance’s ability to do that is having the right technology foundation.”
Despite the importance of having the technology component in place, many organizations have a way to go. The study found nearly one-third (31%) of companies are rarely or never aligned on their digital finance transformation goals, with CFOs identifying that disparity as a top barrier.
Finance leaders are also more than twice as likely as IT leaders to say their organization lacks a digital finance transformation strategy, at 42% and 19% respectively.
To achieve more successful outcomes for their organizations, CFOs and CIOs must work together to drive transformation in the areas of insights, agility, and talent.
Yet challenges remain: 41% of CFOs admitted their CIO doesn’t have a seat at the table during critical finance meetings—even when technology is essential to solving a challenge. Meanwhile, a majority of CIOs (57%) identify their aim of eliminating IT complexity as being at odds with the finance function’s expanding responsibilities.
The study also identified a correlation between a company’s level of alignment between CFOs and CIOs and how far along it is on its finance transformation journey. One-third (33%) of organizations with a high level of alignment between finance and IT departments had developed and deployed a digital finance strategy in the past two years. Just 28% of organizations with low CFO-CIO alignment had done so.
Amy Smith, chief financial officer at Drury Hotels, said greater alignment has provided clarity in identifying and solving problems. “It’s all about realizing what our CIO calls the ‘art of the possible’ because sometimes our team doesn’t realize that we have inefficient processes, or that there’s even an opportunity there.”
In order to achieve more successful outcomes for their organizations, CFOs and CIOs must work together to drive transformation in the areas of insights, agility, and talent.
Alignment and collaboration between CFOs and CIOs are paramount to empowering organizations with the agility necessary to meet future needs and grow the business. Fully realizing finance transformation will drive organizational insights, improve resilience, and help attract and retain people with the necessary skills.
CFOs recognize this, identifying tools needed to develop and upskill finance employees (30%) and technology to manage their performance (23%) among the top four benefits of finance transformation.
Other benefits include automation of systems to report nonfinancial data (24%) and technology to improve procurement and sourcing (23%).
When it comes to nonfinancial data, finance leaders are realizing the value of how information is collected and analyzed, as well as its trustworthiness. More than one-half (51%) of CFOs reported increasing reliance on nonfinancial data to inform financial decisions, including ESG, operational, and customer information.
The ability to collect and analyze an expanded dataset exemplifies a shift for CFOs away from financial reporting to one in which they help create value for the organization in a more forward-looking role. In essence, the CFO is now also the “chief value officer.”
Survey respondents identified ESG as the most important type of nonfinancial data used to develop insights that inform financial decisions. It’s not surprising given that ESG concerns have grown in recent years, garnering global awareness and attention from consumers, stakeholders, and regulators, potentially creating new opportunities for the finance function.
More than half (54%) of CFOs said their legacy ERP systems lack the flexibility necessary to meet modern business needs.
Although one-third (33%) of CFOs are responsible for ESG reporting, more than half (54%) of respondents said finance leaders should have purview of ESG metrics. Fewer respondents said CEOs and CIOs should have oversight of ESG, at 15% and 14% respectively. The rising prominence of ESG efforts creates an opportunity for finance leaders to achieve competitive advantages, as well as business growth.
The rise of next-generation enterprise resource planning (ERP) systems could represent a significant opportunity for finance leaders. The ever-growing capabilities of cloud-based ERP systems include powerful tools such as an intelligent data core, predictive analytics, machine learning, artificial intelligence, and multinational capabilities.
Yet many organizations remain stuck. More than half (54%) of CFOs said their legacy ERP systems lack the flexibility necessary to meet modern business needs. Finance leaders understand the need to upgrade their ERP systems, but most (53%) also said they lack the time to embark on the process of digital transformation.
CFOs understand that upgrading to a modern ERP system will help provide functionality, agility, and oversight, but they also believe making the transition is a time-consuming process. (But buyer beware: Moving a legacy ERP system to the cloud in a lift-and-shift model isn’t the same as a true transformation that involves a modern, cloud-based ERP system.)
Successful alignment will require some “give and take,” said Charlie Steel, CFO at online healthcare provider Babylon. “The CIO must understand that interesting technology has to deliver a financial return,” he added. “But CFOs need to understand that there is an element of experimentation within technology if you want to be at the cutting edge.”
The CFO-CIO partnership is an invaluable component when it comes to talent. More than half (52%) of organizations with high levels of alignment are likely to view their teams as having the skills to keep up with new and emerging finance technology compared to those with low alignment (42%).
Only 42% of CFOs expressed confidence in the integrity and usability of their data, while 57% of CIOs viewed their data as trustworthy.
Technology is also an important factor when it comes to attracting and retaining talent, a critical component of building highly skilled, next-generation finance teams. CFOs identified tools for developing and training employees to broaden their skill base—a prominent factor in employee retention, too—as one of the benefits of finance transformation.
Meanwhile, CFOs expressed the desire for greater financial literacy in IT teams, and CIOs wished for finance employees with better technology and data literacy skills. In short, speaking the same language is important for finance and IT teams.
Speaking of people with a solid grasp of both finance and IT, Daniel Perschke, vice president and controller at The E.W. Scripps Company, said, “They are the types of people that are going to be very valuable moving forward because they’re going to be able to help lead change and be able to help see down the road a couple steps ahead, to see opportunities but also to mitigate risks.”
A majority (60%) of CFOs said their finance digital transformation isn’t typically aligned with businesswide transformation—a disconnect reflected in the differing views of CIOs. A significant portion (42%) of CFOs said they have yet to develop a digital finance transformation strategy, while only 19% of CIOs held the same view.
Another divergence in opinion lies in the quality of organizational data. Only 42% of CFOs expressed confidence in the integrity and usability of their data, while 57% of CIOs viewed their data as trustworthy.
The confidence gap affects the decision-making process. Half (50%) of CFOs admitted they’re making financial decisions based on gut instinct because the data they need is siloed, in the wrong format, or not readily available. A majority (53%) of finance leaders said poor data hindered the accuracy of their forecasts. Nearly a quarter (24%) of CFOs expressed the desire for improved data availability and usability, followed by tools to streamline financial close, consolidation, and reporting (21%).
CFOs consider having the right technology as a way to attract and retain finance talent, yet 57% said they fall short of having the digital tools next-generation talent expects.
The research identified three ways finance leaders can take immediate action:
CFOs and CIOs might not always understand each other's values, opinions, and priorities, but increasing their abilities to align on data, agility, and talent can help empower their organizations to prepare for whatever business challenges lie ahead.
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.
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