There are many current circumstances that have placed companies at a time of deep balancing in order to ensure their competitiveness in the medium and long term. The increase in fixed costs, but also the need to continue betting on technological and strategic challenges in a business world as changing as the current one, they place organizations in a situation of constant challenge.
Deloitte’s CFO Signals report analyzes financial executives’ perspectives on current economic conditions, business risk, and company performance prospects. In addition, the latter also includes a special section for evaluate the management of the IT function, outlining the views of senior finance leaders on technology spend, business value, and performance.
The growing economic uncertainty has directly increased the tension in companies between the obligatory acceleration due to the digital transformation, and cost control. As companies race to stabilize cash flow, neglecting strategic technology imperatives can jeopardize that competitiveness.
For the preparation of this report, approximately 100 financial directors of large North American companies were interviewed. And the results should worry many CIOs.
The necessary change of chip regarding IT spending
Why? because only 5% of CFOs were “very satisfied” with their organization’s IT function. Quite a problem for a technology-driven economy. An additional 29% chose “satisfied” and 66% said they IT departments are in dire need of improvement.
The study asked finance executives to identify the Top three challenges to getting value from your IT function. Being the talent, the non-standardization and the commercial association as the most important. They also claimed to have the right people in IT capable of adding value, but “a shortage of technology professionals with intimate knowledge of the business they are trying to support.”
The perceived shortcomings are closely tied to the top three demands of CFOs to improve IT function performance: increased agility, accountability, and business acumen. For example, to the question, “What actions has your organization taken to improve the value derived from the information technology function and technology spend?”, the most common response was “change IT leadership.”
Definitely, Deloitte results confirm that CFOs continue to view IT as a cost instead of as an aid to accelerate the transformation of companies. The report highlights how one of the basic points of this problem stems from outdated approaches to IT spending that treat technology spending as corporate overhead rather than value chain costs.
47% of CFOs indicated that IT spending was less than 2% of total revenue. Another 28% reported spending between 2 and 4%. And less than 10% claimed to have allocated more than 6% of sales to technology budgets.
The downturn in the economy and inflation, Deloitte concludes, will only compound these IT spending challenges. By hampering with them the efforts of companies to accelerate technological modernization and strategic objectives.