The CFO’s Impact on Technology
Investment Decisions
2011 Gartner FEI Technology Study
John Van Decker
Research VP, Gartner
Bill Overell
President, Overell Solutions
®
This presentation, including any supporting materials, is owned by Gartner, Inc. and/or its affiliates and is for the sole use of the intended Gartner audience or other authorized recipients. This presentation may contain
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© 2010 Gartner, Inc. and/or its affiliates. All rights reserved.
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1
Purpose of the Study
• Gain the CFOs perspective on information technology
within the enterprise. It includes the following topics:
- Economic Environment
- CFO Technology
- ERP /Business Applications
- Business Intelligence Applications
- Shared Services/Outsourcing
- Regulatory
- Role of IT CFO
• 13th year of study – 3rd with Gartner as partner
®
2
Financial Executives
International
OUR MISSION
FEI’s mission is to advance the success of
senior-level
financial
executives,
their
organizations and the profession. Since 1931,
FEI has been connecting members through:
Interaction
Providing local and international forums
for connecting you with your peers;
Information
Providing you with insight to assist in
informed business decisions;
Influence
Providing authoritative representation
for your interests;
Integrity
Providing the tools to advance the
profession through ethical leadership.
Titles/Job Functions
CFO, Executive VP, Senior VP, VP-Finance
60%
Controller
14%
Treasurer
7%
Other Titles
19%
Company Size: Annual Gross Sales
Under $50 million
21%
$51 to $499 million
38%
$500 to $999 million
10%
$1 billion to $9.9 billion
24%
$10 billion or more
7%
344 Highly Qualified Responses in 2011
4
3%
5
18%
7. Extremely
knowledgeable
47%
6
32%
Incomplete and responses not meeting threshold were excluded.
4
Their Role
CFO IT
Functional Role
2%
IT CFO
Functional Role
3%
Other
5%
Senior Finance
Leader
15%
Business Unit
CFO
9%
Enterprise CFO
66%
75% of respondents were CFOs.
5
Their Industries
Manufacturing-Discrete
Professional, Scientific or Technical Services
Manufacturing-Process
Software - publishers or developers
IT Service Providers
Financial Services - all others except insurance
Healthcare - providers, services
Wholesale Distribution
Retail - all others
Energy - oil, gas, solar, other
Healthcare - life sciences
Insurance
Education - higher education
Government-regional, state or local
Agriculture, Mining and Construction
Financial Services - investment banking
Government-federal, national or international
Telecommunications
Transportation - couriers, transportation services
Healthcare - pharmaceuticals
Utilities - electric, gas, water, sewer
Education - primary or secondary
Media
Retail - hotels, restaurants
10%
8%
8%
6%
5%
5%
5%
5%
5%
4%
3%
3%
3%
3%
2%
2%
2%
2%
2%
1%
1%
1%
0%
0%
Source: 2011 Gartner FEI Technology Study, N=334
This study covers a broad spectrum of CFO opinion across industries.
6
Primarily North America, Global Reach
Global-operating in
a large number of
organizations
worldwide
18%
Regional-operating
in a certain area of
a single country
26%
Multi-nationaloperating in more
than one country,
but not global
29%
National-operating
throughout a single
country
27%
Source: 2011 Gartner FEI Technology Study, N=334
47% of respondents in the study have global operations.
7
What are today’s technology constraints?
Creating an effective environment for sharing
relevant information
42%
11%
Facilitating analysis and decision making
9%
Quality of the data used for business information
9%
Creating/maintaining an enterprise-wide view of
business relationships
9%
Helping to position the organization for profitable
growth
8%
Reducing enterprise operating costs
7%
Measuring product and customer profitability
6%
Integrating strategy with daily business operations
and rewards
6%
Managing business risk
5%
Integrating the financial function with the overall
enterprise
5%
46%
43%
32%
33%
43%
33%
29%
26%
Process needs improved
technology support
Process needs the most
significant improvement
in technology support
27%
Source: 2011 Gartner FEI Technology Study, N=334
Business Insight and Business Efficiency will drive IT spending.
8
Agenda
• What is the role of the CFO in IT?
• What is the IT investment climate in 2011?
• What are the priorities?
• How are ERP /business applications viewed?
• How are business intelligence/analytics prioritized?
• What are the regulatory priorities?
• How does the CFO view IT?
9
Agenda
• What is the role of the CFO in IT?
• What is the IT investment climate in 2011?
• What are the priorities?
• How are ERP /business applications viewed?
• How are business intelligence/analytics prioritized?
• What is the direction on shared
services/outsourcing?
• What are the regulatory priorities?
• How does the CFO view IT?
10
Who authorizes IT investment?
Steering Committee of IT and Business
Area Executives
29%
18%
CFO
26%
27%
25%
CIO and CFO together
CIO
Steering Committee of IT and Business
Area Operational Managers
11%
5%
4%
4%
2010
2011
8%
Other
11%
The CFO has a more major role (51%+) then in 2010.
11
Where does IT report?
Source: 2011 Gartner FEI Technology Study, N=334
33%
35%
Chief Executive Officer (CEO)
42%
Chief Financial Officer (CFO)
46%
13%
10%
Chief Operating Officer (COO)
Chief Administrative Officer
2%
2%
Currently reports to
Should report to
Business Unit Leader
President, (not CEO or COO)
Other
3%
1%
3%
4%
5%
3%
Consistent with 2010 study, 42% of ITOs report to CFOs – it will increase
12
Agenda
• What is the role of the CFO in IT?
• What is the IT investment climate in 2011?
• What are the priorities?
• How are ERP /business applications viewed?
• How are business intelligence/analytics prioritized?
• What are the regulatory priorities?
• How does the CFO view IT?
13
2011 Investment Expectations
Source: 2011 Gartner FEI Technology Study, N=334
We expect the economic environment
to be similar to 2010
40%
We expect the economy to stabilize at
current levels
14%
We expect the economy to recover and
grow compared to 2010 but not reach
2008 levels of economic activity
38%
We expect the economy to rebound and
grow above 2008 levels of economic
activity
Do not know
6%
2%
View of economic opportunity is conservative; 38% see growth in
14
IT Operational Spend Forecast
2012 vs. 2011
2011 vs. 2009
Increased
by 10% or
more
13%
Decreased
by 10% or
more
13%
Increased
by 10% or
more
7%
Decreased
by 3-9%
15%
Increased
by 3-9%
23%
Decreased
by 10% or
more
Decreased
4%
by 3-9%
7%
Increased
by 3-9%
31%
About the
same +/3%
51%
About the
same +/3%
36%
Source: 2011 Gartner FEI Technology Study, N=334
IT operational spending expected to neutralize more in 2012
15
IT Capital Forecast
2011 vs. 2009
Increased
by 10% or
more
21%
2012 vs. 2011
Decreased
by 10% or
more
19%
Increased
by 10% or
more
18%
Decreased
by 10% or
Decreased
more
by 3-9%
6%
6%
Decreased
by 3-9%
11%
Increased
by 3-9%
20%
Increased
by 3-9%
30%
About the
same +/3%
29%
About the
same +/3%
40%
Source: 2011 Gartner FEI Technology Study, N=334
48% see an increase in capital spending in 2012
16
IT Investment Perspective
We are continuing to invest where can be demonstrated
competitive advantage
72%
33%
We are pursuing business process outsourcing BPO
14%
20%
We have deferred new projects.
20%
8%
We are pushing more responsibility out to user
organizations
Current economy's influence
Most influence
11%
7%
IT is renegotiating service agreements with business units
to reduce maintenance and support.
24%
7%
We are cutting IT spending and/or staff.
5%
We are discontinuing certain non-mission critical
applications and support.
5%
We are moving to on-demand/software as a service
applications and support
4%
We are investigating newer technologies (Web 2.0, Service
Oriented Architecture).
3%
We are continuing to invest where can be demonstrated
business process efficiency.
2%
11%
15%
15%
38%
64%
Consistent with 2010 study, investment will continue where there
is competitive differentiation and efficiency.
17
Agenda
• What is the role of the CFO in IT?
• What is the IT investment climate in 2011?
• What are the priorities?
• How are ERP /business applications viewed?
• How are business intelligence/analytics prioritized?
• What are the regulatory priorities?
• How does the CFO view IT?
18
2011 Top Technology Initiatives
Source: 2011 Gartner FEI Technology Study, N=334
1st choice
Business intelligence, analytics, performance management
23%
Enterprise business applications
2nd choice
24%
30%
10%
Data and document management & storage
6%
Service-oriented applications and architecture
6%
Mobile technologies
5%
7%
9%
Networking, voice and data communications (unified… 5%
8%
7%
8%
3rd choice
18%
6%
14%
10%
6%
Cloud computing
4%
6%
7%
Security technologies
4%
7%
5%
IT management
4% 5%
8%
Virtualization
5% 5%
6%
Governance risk and compliance applications (GRC) 2% 5% 5%
Software-as-a-Service (On Demand Hosted applications) 3% 4% 3%
Social networking 1%
1%5%
Enterprise mash-ups 1%
0%
Green IT 1%
0%
Business intelligence/analytics and business applications re-emerge
in 2011 as top technology initiatives
19
2012 Top Technology Initiatives
Source: 2011 Gartner FEI Technology Study, N=334
1st choice
Business intelligence, analytics, performance management
26%
Enterprise business applications
Data and document management & storage
Service-oriented applications and architecture
7%
Mobile technologies
8%
Cloud computing
7%
Networking, voice and data communications (unified… 5%
11%
9%
3rd choice
13%
11%
12%
8%
8%
8%
6%
7%
8%
7%
8%
IT management 4%
7%
5%
Governance risk and compliance applications (GRC) 4%
8%
5%
Security technologies
24%
21%
5%
2nd choice
5% 3% 7%
Software-as-a-Service (On Demand Hosted applications) 3% 5% 4%
Social networking 1%
2% 6%
Virtualization 2%
2%5%
Enterprise mash-ups 0%
1%
1%
Green IT 2%
Business intelligence/analytics will continue to be a priority in 2012.
20
Agenda
• What is the role of the CFO in IT?
• What is the IT investment climate in 2011?
• What are the priorities?
• How are ERP /business applications viewed?
• How are business intelligence/analytics prioritized?
• What are the regulatory priorities?
• How does the CFO view IT?
21
Business application strategy
Source: 2011 Gartner FEI Technology Study, N=334
Operate and
maintain separate
systems
7%
Other
2%
Discontinue all
disparate systems
and implement a
single integrated
system for core
areas
34%
Build new interfaces
between existing
systems
15%
Adopt best of breed
applications and
develop necessary
interfaces
42%
Systems consolidation remains a focus (34%) but many still
pursue best of breed applications first (42%)
22
Release strategy
Implement as new
Implement only
releases become
when installed
available
release is no longer Other
11%
supported
3%
9%
Implement to
remain within one
release of current
release
25%
Implement only
when substantial
new functionality is
provided
52%
Source: 2011 Gartner FEI Technology Study, N=334
Many organizations remain close to new releases
while many seek a business benefit before upgrade
23
Configuration not Customization
We implement the
solution as is but are
prepared to customize
the solution to meet our
needs in some
business process
areas
9%
We implement the
solution as is out of the
box with no changes,
and change our
business processes to
fit the solution
29%
We implement the
solution as is with no
changes, adjusting our
business processes if
necessary to meet the
functionality of the
software solution
62%
Source: 2011 Gartner FEI Technology Study, N=334
89% of organizations seek to take advantage of application best practices,
while many also implement vanilla.
24
Implementation Model – SaaS Gaining
As Software as a
Other
Service or SaaS
2%
10%
As an Application
Service Provider or
ASP solution
12%
A licensed software
that your
organization runs
and maintains inhouse
76%
Licenced software will continue to be primary delivery platform
25
Business Applications Expectations
6
Provided business value
Integrated with business
processes
36%
23%
30%
Provided business insight
32%
Operated within expected cost
range
31%
Achieved transactional
excellence
7. Extremely important
25%
19%
15%
27%
Met the schedule
24%
Reduced risk
24%
17%
15%
9%
Firms are focusing primarily on improving business value
26
ERP Instance Preferences
Business
Units/subsidiaries
make their own choice
of ERP/integrated
Other
finance
systems
1%
Tiered approach 5%
larger business units
use one ERP system
while smaller business
units use one more
appropriate for their
size
11%
Single, global
administrative ERP
backbone, business
units/subsidiaries
choose their own
operational systems
19%
Single, global
integrated ERP system
64%
ERP consolidation is a preference, with 64% of organizations
looking for a single instance ERP.
27
Agenda
• What is the role of the CFO in IT?
• What is the IT investment climate in 2011?
• What are the priorities?
• How are ERP /business applications viewed?
• How are business intelligence/analytics prioritized?
• What are the regulatory priorities?
• How does the CFO view IT?
28
BI Investment in 2011
We don't have
analytical and
decision support
technologies
10%
Yes, currently in the
process
27%
No, with no plans to
do this within the
next 12 months
36%
Yes, planning to
within the next 12
months
27%
Source: 2011 Gartner FEI Technology Study, N=334
54% of companies are making improvements in BI now or
are targeting BI investments over the next year.
29
BI/PM Investment Focus - 2011
Source: 2011 Gartner FEI Technology Study, N=334
Planning/budgeting/forecasting
64%
Performance measurement/scorecard/dashboard
60%
Financial consolidation and reporting
51%
Customer and product profitability
44%
Data warehouse
41%
Statistical analysis
25%
Predictive modeling
22%
CPM applications lead the areas of BI investment
from the CFO’s perspective.
30
Agenda
• What is the role of the CFO in IT?
• What is the IT investment climate in 2011?
• What are the priorities?
• How are ERP /business applications viewed?
• How are business intelligence/analytics prioritized?
• What are the regulatory priorities?
• How does the CFO view IT?
31
XBRL Plans
44%
34%
13%
7%
2%
1%
External
reporting only
External
External
Benchmarking
reporting and
reporting and
my
supplement to replacement for organization's
existing internal certain internal
financial
reporting
reporting
information to
others in the
market
No decision at
this stage
Not applicable
for my
organization
Source: 2011 Gartner FEI Technology Study, N=334
XBRL planning lags most North American organizations.
32
XBRL Strategy
Not impacted by
regulatory
requirement at
present
15%
Purchase financial
statement
collaboration
solution that has
XBRL tagging
30%
Outsource XBRL
tagging to financial
statement publisher
24%
Purchase XBRL
tagging solution
only without
financial statement
production
12%
Will do it all in
Microsoft Office
20%
Source: 2011 Gartner FEI Technology Study, N=74
The market for financial statement generation/collaboration products
Is growing with 30% looking for solutions.
33
IFRS Plans
39%
27%
16%
12%
6%
All conversion
Planning and impact
activities to be
analysis in progress,
deferred until closer but implementation
to the required
to be deferred until
adoption date
closer to the
required adoption
date
All conversion
activities are in
progress
Conversion activities Not applicable for
are complete
my organization
27% are still delaying work on IFRS, but major ERP
changes require long lead times.
34
Role of IT in IFRS
Source: 2011 Gartner FEI Technology Study, N=113
Active participant on
IFRS conversion
steering committee
5%
Active participant on
IFRS conversion
project management
office
14%
Other
5%
No role for IT
Department in early
stages of conversion
40%
Kept apprised of IFRS
conversion efforts, but
not an influencer
36%
40% of IFRS impacted organizations have not yet involved IT.
35
IFRS Strategy
We plan on making
addressing
requirements in our
financial reporting
solution only
20%
We have no plans to
address IFRS
requirements from an
IT perspective within
the next 12 months
43%
We plan on managing
all GAAP to IFRS
activities offline in
spreadsheets
8%
We are using this to
justify a new ERP
system to replace our We are using this to
justify an ERP
existing
upgrade, where we will
1%
configure IFRS
requirements
4%
We envision minor
changes to our ERP
system
24%
Source: 2011 Gartner FEI Technology Study, N=334
43% of organizations may be surprised and may not be able to react
to US IFRS requirements.
36
Agenda
• What is the role of the CFO in IT?
• What is the IT investment climate in 2011?
• What are the priorities?
• How are ERP /business applications viewed?
• How are business intelligence/analytics prioritized?
• What are the regulatory priorities?
• How does the CFO view IT?
37
What are the expectations of IT
IT is responsible for managing and operating
technology systems and resources efficiently
28%
IT is responsible for enabling business
operations by building and operating
technology systems defined by the business
25%
IT is responsible for contributing to the
enhancement of business operations by using
technology proactively to raise business
performance
35%
IT is responsible for being the primary source
of the enterprise's competitive advantage as
technology is a differentiator in enterprise
products or services
IT is responsible for the transformation of the
enterprise's business model and the creation
of new markets and rules of competition
8%
4%
Source: 2011 Gartner FEI Technology Study, N=334
Only 35% of organizations see IT as being a strategic driver of
business performance.
38
Room for improvement
6
Our IT organization has the funding to meet its
commitments for 2010
28%
Our IT organization has clear and effective
governance
The CIO is a key player in determining the
business strategy
Our IT organization is able to deliver against the
enterprise's/ business unit's strategy
24%
Our IT organization has the right number of
skilled people to meet business needs
Our IT service levels meet or exceed business
expectations
8%
22%
24%
Our IT organization delivers the technology
innovations needed by the business
13%
24%
Our IT organization has the organizational and
technical flexibility to respond to changing
business priorities
7. Strongly agree
10%
7%
6%
21%
5%
19%
6%
18%
5%
Only 32% see the CIO as being a key partner in strategy
39
Key to IT investment success
6
Business ownership of the business
case.
26%
7. Extremely effective
12%
Business case for the project
28%
9%
Program project management
28%
8%
Post implementation reviews
20%
Change management
17%
Project benefits are 'baked' into
operating budgets and headcount
Business reviews that concentrate on
benefits harvesting
6%
15%
6%
14%
Formal business benefits audit
Chargeback
6%
4%
11%
6%
2%
3%
Source: 2011 Gartner FEI Technology Study, N=334
While technology may be a given, business partnership
may be more critical to a successful IT relationship
40
Top 10 Key Observations (not prioritized)
•
Gaining business insight and improving business efficiency are the top
technology opportunities – top constraints are around BI
•
BI/PM top IT investment plans – CPM leads
•
35% view IT as being strategic to business performance
•
CFOs influence in IT is growing – 42% of IT reports to CFO
•
Organizations willing to spend where competitive differentiation and
efficiency can me achieved
•
IT spending to recover in 2011, more capital investment as economy
improves
•
Achieving business benefit from IT still a concern/opportunity, though 68%
see benefits being realized
•
Reducing ERP instances with more vanilla implementation desired
•
XBRL and IFRS projects lag
•
Understanding and working with the business is key to IT success over
technological excellence
41
Recommendations
• Understand your CFO’s perspective on
technology
• If you have not already, seek to improve the ITCFO partnership opportunity
• Benchmark your organization to your peer group
in the study to understand where you may need
to target improvement
• IT must focus on getting closer to the business in
order to be viewed strategically
42
2011 Gartner FEI Technology
Study
John Van Decker
Research VP, Gartner
Bill Overell
CEO, Overell Solutions
This presentation, including any supporting materials, is owned by Gartner, Inc. and/or its affiliates and is for the sole use of the intended Gartner audience or other authorized recipients. This presentation may contain
information that is confidential, proprietary or otherwise legally protected, and it may not be further copied, distributed or publicly displayed without the express written permission of Gartner, Inc. or its affiliates.
© 2010 Gartner, Inc. and/or its affiliates. All rights reserved.