The CFO-CIO Pathway to Business Cohesion

ESTIMATED READING TIME: 6 MINUTES

Rising Infotech Costs and Better ROI for the CFO

A recent survey instigated by Rimini Street Inc. and conducted early in 2024 by Censuswide, questioned 2,937 CFOs and CIOs across mostly medium and large enterprises across the globe.

Here’s my summary of their findings, which reveal some interesting facts about:

• the rising cost of information technology and services,
• the adoption of emerging technologies, like Generative Artificial Intelligence (GenAI), to address those rising costs,
• the demand from CFOs for better return on investment (ROI), and
• poor ROI from enterprise resource planning (ERP) projects.

The report concludes that CFOs and CIOs need to work better together. They need cohesive visions and strategies, and shared objectives. For the organisation to be successful, they must also stride to balance between innovation and revenue, and between customer experience and business outcomes.

Working together requires a better understanding of the two sides of the coin; 85% of CFOs say that their CIOs need to develop better business acumen, while 86% of CIOs say that CFOs need to have a better understanding of technology. In other words, there’s a communication barrier that needs bridging. The KSIR 4-point strategy (more on this later) promotes a foundation of improved business language and knowledge capture as the pathway to taking a major step forward in this area.

One aspect of staff turnover that is not considered by this survey is the loss of organisational knowledge and its impact on risk. This is a key driver for the four-point KSIR strategy presented in the book, Data Governance Needs Risk Management – Moving from Data-driven to Business-driven, which I co-authored with Terry Smith.

As another tactic to address the increasing cost of technology and manage the issue of IT staff attrition, 44% of CIOs are looking at short-term investments in emerging technologies, such as generative AI. Overall, between 75% and 90% of survey respondents say they are already investing in emerging technologies or intend to do so soon. I would advise caution on doing so, based on the analysis and predictions made by the Project Management Institute about project failure in these kinds of technologies—you can read more about that here.

Regarding emerging technology adoption, 18% of CFOs report seeing little or no business improvement from that investment, while 20% report a negative impact in the form of business disruption and increased operating costs. Amazingly, 17% report that most of their investment is not even tied to business objectives!

Adopting GenAI has its own issues. While 87% of CIOs agree that historical data is crucial for getting value from AI and ERP initiatives, a combined 94% (CIO and CFO) admit that their data is not of suitable quality.

Yet only 18% of CIOs are not adopting emerging technologies. The remainder are either being cautious or are looking at system upgrades and replacements as an approach to adopting emerging technologies.

The takeaway from all this is that CIOs need to expect a much higher degree of oversight from their business counterparts – CFOs are generally unhappy with the return on investment and the disruption to business and the bottom line. For those CFOs that did see business improvement from their technology investments, 49% attribute this primarily to good relationships with their CIOs.

CFOs Unhappy with ROI, especially from ERP

Over the last few years, several of our customers, and many others, have embarked on major projects for ERP upgrades and migrations. We’ve had reports of project failures – cost overruns and delays due to unexpected data migration and data quality issues – and business disruption from many of these. Not surprisingly, the survey found that, out of nine technology investment areas, the executives reported the least value coming from ERP project investments.

Regarding data migration and quality, only 7% of CIOs consider their ERP data to be of decent quality. Perhaps neglecting to agree common term definitions that are required for successful ERP system implementations is a key factor in those data quality and data migration issues.

We’ve seen our client base struggle somewhat because of budget cuts due to ERP and other technology-project demands. Ironically, our KSIR risk management strategy significantly reduces the risk of these cost overruns and business disruption. Yet, despite our providing good ROI for our KSIR ecosystem, based on a combination of cost-savings and improved project success, the CIOs still prioritise big-ticket technology investment with questionable ROI.

Of the IT initiatives that CFOs do want CIOs to focus on, selecting up to 3 of the 4 options, revenue generating initiatives came top at 28%, with risk management and compliance coming second at 27%. Security and privacy came in at equal third with next-generation disruptive technology at 25%.

The report notes interest in that CFOs see security, risk and compliance as generating ROI. I’m not surprised; the CFOs I’ve spoken with are very concerned about regulatory non-compliance along with reputational risk due to security breaches. Most concern is over the abundance of (what IT call) unstructured data—information artefacts such as data sets, spreadsheets, documents, reports, product specifications, etc. The CFOs’ concern is over visibility, loss, use of invalid information, and not realising potential value.

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At Intraversed, we have witnessed real improvement in business value through clear business language.

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You can hear more of my thoughts on this in a recent interview for a podcast about Management and Governance of Unstructured Data Based on a Foundation of Business Literacy. You can watch it here on YouTube.

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