Global Survey Reveals CFOs Prioritizing Digital Transformation Investments
Rimini Street, Inc. (Nasdaq: RMNI), a global provider of enterprise software products and services, the leading third-party support provider for Oracle and SAP software products and a Salesforce partner, today revealed findings from a recent global survey of more than 1,500 CFOs and senior financial leaders across 13 markets covering most industries. The survey was conducted to identify CFO’s perceptions of digital transformation, their IT spending priorities, how they measure the ROI on technology investments and their viewpoints on the CFO-CIO partnership. According to the survey report, when it comes to digital transformation and its significance amongst other corporate priorities, 80% of CFOs globally cite it is within the top-five of their list of priorities, 71% of CFOs surveyed believe that digital transformation investments are key to their company’s success and 77% said they would help the CIO find a way to fund a new digital transformation project if the initiative delivered strong ROI. In addition, 67% of CFOs say they “refuse to waste precious dollars on IT investments that don’t move the needle.”
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Global Survey Reveals CFOs Prioritizing Digital Transformation Investments (Photo: Business Wire)
CFOs Are Bullish About Digital Transformation
Today’s modern CFO’s level of understanding of technology and its potential for delivering returns is higher than ever. When it comes to digital transformation, it is more than a buzzword for CFOs and definitely on their priority list. In addition to the large majority who cite digital transformation as a top-five priority compared to other corporate initiatives, 59% cite it is actually in their top three priorities. In addition, of the 80% of CFOs who expect their technology spending to increase in 2021, almost half (46%) say this growth in spending is being driven by new digital transformation investments.
Due to the COVID-19 pandemic, consumers shifted dramatically to online channels and businesses responded by increasing digital investments. Although digital transformation was on the roadmap for many companies prior to 2020, the global pandemic removed internal barriers, aligned corporate teams and accelerated the adoption of technology to support new business critical requirements, from remote work to digital customer interactions to supply chain resourcing. Almost three of every four (73%) CFOs indicated that the global pandemic increased their digital transformation investment, and the vast majority of survey respondents (95%) agree that technology investments are key to recovering from the business impacts of the pandemic.
CFOs See Clear Business Value and ROI from Optimizing Existing Technology Investments
CFOs expect their CIOs to present technology investment proposals that demonstrate business value and strong ROI. When asked about the type of IT projects they personally want to see more of from their CIO because they see clear business value and strong ROI, “optimizing existing technology investments” topped the list with 44% of survey respondents. CFOs also cited “revenue-generating technology initiatives” (40%) and “process improvements and employee efficiency” (39%) as their second and third choices respectively.
CIOs that continually optimize their IT operations are in a strong position to create and secure new funding for strategic IT investments that are aligned with business priorities. As a result, IT resources – including time, money and personnel – can be reallocated to critical new revenue generating initiatives that create competitive advantage and growth for their organization.
CFOs Refuse to Waste Precious IT Resources on Low Value Projects
One of the CFOs’ primary considerations for IT spending is prioritizing those projects that yield positive business outcomes – 67% of CFOs surveyed agree that they “refuse to waste precious dollars on IT investments that don’t move the needle.” In addition, 70% of respondents say they want to cut spending on non-essential IT investments. When asked about the type of IT projects they personally prefer to cancel when they don’t see clear business value or strong ROI, responses included “next-generation disruptive technology initiatives” and “major ERP reimplementation and migration projects.” When there is not a strong ROI, technology for technology’s sake or forced by major ERP vendors does not satisfy CFOs that want to see strong business value for IT investments.
Large technology investments that may not have a clear business case, such as some vendor-forced ERP migrations and upgrades, may be better deferred or avoided and instead ERP systems can be optimized through strategies like third-party support, enabling the CIO to free up IT resources to help accelerate digital transformation programs.
“The CFO has an expanded role today and should always be part of the technology agenda decisions including how digital transformation initiatives can improve and impact the business moving forward. As CFO for Usina Coruripe, I am always looking at our technology investments through the lens of ‘will this project move the needle for our business and provide competitive advantage and growth.’ And the innovation we need will not come from any ERP, but from business-driven applications. As the CFO survey respondents emphasized in the report, I needed a solution that could better optimize what we had and improve operational efficiency,” said Thierry Soret, chief financial officer, Usina Coruripe. “Partnering with Rimini Street to take on ERP support is a great lever for both the CFO and CIO to enable their organization to free up time, money and resources and to help achieve those strategic innovation goals while maximizing their current software investments.”
CFOs Expect Short ROI Timelines for Technology Investments
In addition to providing a clear business case on new transformation projects, CFOs also expect the ROI on technology spending to be swift, with 46% of CFOs expecting to see ROI on their technology investment within two years, and the vast majority (82%) within 3-5 years.
Timing is also very important in terms of when the CIO should engage the CFO on a major new IT initiative. Most CFOs (88%) prefer that the CIO involves them before the business plan is fully crafted. In particular, 47% of CFO respondents would rather have the CIO engage as the business plan is being developed, and 41% want IT to partner with finance when the idea is fully formed but before the business plan is completed.
The CFOs growing acceptance of digital transformation initiatives, coupled with their willingness to support projects that have clear business outcomes means that they are increasingly willing to lead funding efforts for projects that demonstrate business value. When asked how they would respond to their CIOs digital transformation proposal requiring additional investment that would likely deliver a strong ROI, 77% of CFOs said they would help the CIO find a way to fund the project, and 28% of CFOs would even go to bat with the board to help the CIO secure needed funding.
A Strong CFO-CIO Partnership is Critical to Success
Technology is expanding the role that CFOs and CIOs play in an organization, as well as the need for a close collaboration between IT and Finance. Today’s CFO and CIO must have a solid understanding of customers and markets and technology’s role is connecting them. If both roles collaborate, they can be a productive, powerful team for the business – 92% of CFOs agree that “a successful CFO has a great relationship with their CIO counterpart.” The survey also revealed that 69% of CFOs have a favorable view of their CIOs, with 47% stating that their CIO is a partner “that helps connect the dots between technology and business decisions” and 22% stating that their CIO is an “innovative change-agent that drives business strategy.”
In addition, more than three in four CFOs (77%) shared that last year’s challenging business landscape served to strengthen their relationship with their CIO. CFOs primarily attribute this change due to an increased focus on security, compliance and risk (52%), the urgent need to collaborate to make nimble technology decisions (50%) and the CIOs proactive engagement with them (42%).
For those CFOs who noted a worsening relationship with their CIO last year, a few reasons cited include the CIOs lack of flexibility on identifying ways to cut costs (32%), the CIOs plans did not demonstrate adequate ROI (31%) and the CIO did not welcome attempts to engage proactively (28%).
While the CFO/CIO relationship is interconnected, sometimes these roles can be divided as both may speak different “languages” about the same topic. According to the research, 92% of CFOs say that the CIO needs to be more business savvy now than they were two years ago, and 94% agree that CFOs need to be more technology savvy than they were two years ago.
“This report highlights the heightened importance of digital transformation for CFOs but reinforces that IT investments must have clear business value to receive CFO support. It’s not surprising that CFOs want to cancel IT projects that lack a strong ROI, like many software vendor-forced ERP reimplementations and migrations, given that resources can be liberated for new technology investments that accelerate achieving the businesses digital goals,” said Seth A. Ravin, Rimini Street CEO. “By switching to Rimini Street Support, our clients are uniquely enabled to take back the control of their IT roadmaps, maximize the lifespan and value of current ERP investments and free up significant funding and internal resources to help fund those critical digital transformation initiatives that create competitive advantage and growth.”
The report is based on a global online survey conducted by Dimensional Research and sponsored by Rimini Street. More than 1,500 CFOs or equivalent top finance professionals from 13 countries, representing companies with at least $200 million (US$) in annual revenue, participated in the survey.
To download a copy of the report, “CFO Peer Insights: Digital Transformation and IT Spending Priorities,” click here.
About Rimini Street, Inc.
Rimini Street, Inc. (Nasdaq: RMNI) is a global provider of enterprise software products and services, the leading third-party support provider for Oracle and SAP software products and a Salesforce partner. The Company offers premium, ultra-responsive and integrated application management and support services that enable enterprise software licensees to save significant costs, free up resources for innovation and achieve better business outcomes. To date, more than 4,000 Fortune 500, Fortune Global 100, midmarket, public sector and other organizations from a broad range of industries have relied on Rimini Street as their trusted application enterprise software products and services provider. To learn more, please visit http://www.riministreet.com, follow @riministreet on Twitter and find Rimini Street on Facebook and LinkedIn.
Certain statements included in this communication are not historical facts but are forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. Forward-looking statements generally are accompanied by words such as “may,” “should,” “would,” “plan,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “seem,” “seek,” “continue,” “future,” “will,” “expect,” “outlook” or other similar words, phrases or expressions. These statements are based on various assumptions and on the current expectations of management and are not predictions of actual performance, nor are these statements of historical facts. These statements are subject to a number of risks and uncertainties regarding Rimini Street’s business, and actual results may differ materially. These risks and uncertainties include, but are not limited to, the actions of the holders of the Series A Preferred Stock and the terms and impact of Rimini Street’s remaining outstanding 13.00% Series A Preferred Stock; the duration of and economic, operational and financial impacts on Rimini Street’s business of the COVID-19 pandemic, as well as the actions taken by governmental authorities, clients or others in response to the COVID-19 pandemic; catastrophic events that disrupt Rimini Street’s business or that of its current and prospective clients, changes in the business environment in which Rimini Street operates, including inflation and interest rates, and general financial, economic, regulatory and political conditions affecting the industry in which Rimini Street operates; adverse developments in pending litigation or in the government inquiry or any new litigation; Rimini Street’s need and ability to raise additional equity or debt financing on favorable terms and Rimini Street’s ability to generate cash flows from operations to help fund increased investment in Rimini Street’s growth initiatives; the sufficiency of Rimini Street’s cash and cash equivalents to meet its liquidity requirements; changes in taxes, laws and regulations; competitive product and pricing activity; difficulties of managing growth profitably; customer adoption of Rimini Street’s recently introduced products and services, including its Application Management Services (AMS), Rimini Street Advanced Database Security, and services for Salesforce Sales Cloud and Service Cloud products, in addition to other products and services Rimini Street expects to introduce in the near future; the loss of one or more members of Rimini Street’s management team; uncertainty as to the long-term value of Rimini Street’s equity securities; and those risks discussed under the heading “Risk Factors” in Rimini Street’s Annual Report on Form 10-K filed on March 3, 2021 and as updated from time to time by other filings by Rimini Street with the Securities and Exchange Commission. In addition, forward-looking statements provide Rimini Street’s expectations, plans or forecasts of future events and views as of the date of this communication. Rimini Street anticipates that subsequent events and developments will cause Rimini Street’s assessments to change. However, while Rimini Street may elect to update these forward-looking statements at some point in the future, Rimini Street specifically disclaims any obligation to do so, except as required by law. These forward-looking statements should not be relied upon as representing Rimini Street’s assessments as of any date subsequent to the date of this communication.
© 2021 Rimini Street, Inc. All rights reserved. “Rimini Street” is a registered trademark of Rimini Street, Inc. in the United States and other countries, and Rimini Street, the Rimini Street logo, and combinations thereof, and other marks marked by TM are trademarks of Rimini Street, Inc. All other trademarks remain the property of their respective owners, and unless otherwise specified, Rimini Street claims no affiliation, endorsement, or association with any such trademark holder or other companies referenced herein.
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