Most enterprises aren’t just talking IT Transformation anymore – they are placing big bets and big money on modernizing IT infrastructures. None of this is technology for technology’s sake — senior executives have clear business goals in mind when they invest in IT Transformation. Unfortunately, despite these major investments in time and money, many of them still haven’t found the secret to transformation success or how to deliver concrete business results from these efforts.
A new study by Forbes Insights and Dell EMC released today shows that the number of organizations dedicating up to 50% of their budgets to IT Transformation will rise nearly fivefold by 2018. The most critical goals include the drive to reduce IT costs (75% of respondents), be first to market with new products and services (73%) and reallocating funds to strategic business projects (67%). With so much riding on these transformations, it’s critical to understand the potential barriers and how to overcome them.
Why? Because leaders – where IT Transformation is established and starting to be viewed as a key strategic priority – are more than 2X as likely to report they are ahead of their competition and 2.5X more likely to report return on investment in 12 months or less.
Many enterprises still aren’t gaining a clear competitive advantage from transformation strategies. In fact, 59% say they’ve achieved parity with competitors. Less than stellar transformation results often center on problems that arise between two pivotal players — CIOs and CFOs, who struggle to work together as a team.
According to the study, collaboration problems are exacerbated by conflicts arising from traditional reporting structures and a lack of new incentives aimed at fostering closer cooperation between CIOs and CFOs. CFOs point to problems stemming from a lack of business expertise among CIOs and the conflicting priorities of the two groups – although they also acknowledge that their own attitudes about the role of CIOs are outdated.
An astounding 89% of senior executives surveyed acknowledge that significant barriers keep CIOs and CFOs from collaborating more closely on IT Transformation initiatives. Nearly all respondents (96%) see close CIO/CFO collaboration as being important or critical to business success; however less than 40% would describe it as excellent. Interestingly, when asked to rate the effectiveness of CIO/CFO collaboration, nearly three-quarters (72%) of CEOs and 63% of COOs consider it excellent.
Realizing the full benefits of IT Transformation requires better CIO/CFO collaboration, but where do you start? The report recommends these 6 steps:
- Update reporting structures to address the evolving roles of CIOs
- Cultivate change agents among CIOs and CFOs
- Measure — and reward — CIO performance according to business outcomes
- See ROI calculations as guides, not hard and fast requirements
- Implement clear milestones to monitor the progress of higher risk initiatives
- Turn the IT department into a consultancy
When CIOs and CFOs are in sync, the biggest benefit according to the respondents is the ability to react more quickly to market changes (22%), attract new customers in current markets (16%) and more quickly introduce new products and services requested by the business (14%).
There is a lot at stake with IT Transformation, but with closer collaboration between CIOs and CFOs, leading enterprises can turn it into a strategy for business success.
If you’re interested in learning more about the relationship between CIOs and CFOs, and the impact it can have on IT Transformation, download the Forbes Insights report, “IT Transformation: Success Hinges on CIO/CFO Collaboration”.