Technology Mega-Trends the CFO Must Know

by Carol Ko, 22 February 2012

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topics:
Enterprise Software and Systems Technology

tags:
Big Data budgeting and forecasting cloud computing

Not long ago, expenditures on information technology used to come entirely out of IT’s budget. That may no longer hold true. By 2015, predicts technology research organization Gartner, more than a third of enterprise IT expenditures will be managed outside the IT department as other units directly source and fund their own software systems.

As companies morph into “next-generation digital enterprises,” suggests Gartner’s Research Vice President Brian Prentice, CFOs may need to reimagine the nature of finance within their organizations.

He identifies four technology trends that are shaping the future of IT, finance and the rest of the business:

reallocation of the IT budget
adoption of cloud services
imposition of a global energy surcharge
storage of customer data in the public cloud

Gartner detects other mega-trends. For example, employees increasingly bring and use their own smart phones and tablets to the workplace to access business applications and corporate data. The company should be ready to support multiple devices, but ensure security is not compromised.

And as they evolve into digital enterprises, companies will be adding more and more information to their already bulging data warehouses. Such Big Data will only be meaningful when it is collected, analyzed and presented in a timely manner, and that means new investment in software and humanware – and better deployment of current and future resources.

Reallocating the IT budget

By 2015, Gartner expects that 35% of enterprise IT expenditures for most organizations will be managed outside the IT department's budget.

Business managers and individual employees will increasingly demand control over IT expenses. Prentice says key company stakeholders like finance and HR will fund 25% to 35% of IT activities, such as payroll, e-recruitment and performance management. Marketing and sales will want to do the same, arguing that they understand their business better than IT.

While CFOs reallocate portions of IT budgets elsewhere, how far should the company hold CIOs accountable for applications adopted by other business lines? “It is a complicated question, because an application is one part about technology, another part about business processes and business values,” says Prentice. “So a CIO is not fully responsible for a process or a business outcome that [results from] a partnership. The business managers are ultimately responsible.”

Nonetheless, CIOs will still be needed in such areas as collaboration systems, master data management, data warehousing, and analytics solutions. “The point is, while portions of the outcome spread to other parts of the organization, the CIO still plays a central role in connecting and driving value for all the connections in between those systems,” Prentice says.

Finance, IT and other parts of the business will need to readjust how they relate to each other, even in businesses where the CIO is a direct report of the CFO. The company that makes the transition seamlessly will be well-positioned as a next generation digital business.

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