Call it the fantasy baseball syndrome.
Back in 1998, when the Internet first started coming into real prominence, players of rotisserie baseball believed the Web would give them an insuperable advantage over their competitors. By going onto the Net, fantasy leaguers could read every local newspaper, visit every team Web site, and in general, collect player data that their competitors would not have. And in the world of fantasy baseball, information is everything.
There was only one flaw with this plan. By the late ’90s, Internet access was becoming almost universal. Hence, everyone — from novices to devotees — had access to the same information. It didn’t take long before almost all fantasy leaguers were using the Net to gather player news and arcane stats. Eventually, nonsubscription Web sites blossomed, which meant rotisserie players didn’t even have to scour the Net anymore. Somebody else did it for them.
In the end, it became clear that the using the Net didn’t give fantasy leaguers an insuperable advantage. Not using the Net, however, put them at a sizable disadvantage.
Same thing for business. While there’s not a company out there that doesn’t spend a large amount of capital on technology, the prevailing sentiment among CFOs seems to be that IT is a competitive advantage. Or at least, that’s the takeaway from a study conducted by CFO Research Services and Getronics. In the survey of 288 senior finance executives in the United States and Europe, about half of the respondents said technology is vital to business growth. Another 46 percent believe IT spending enables business process improvement. Only 5 percent said technology is purely a tactical tool, which, if you buy into the baseball analogy, would seem to be the right answer.
The survey also revealed that, despite reports to the contrary, companies are still spending on IT projects. Around 60 percent of the finance managers in the survey indicated they were increasing tech investments, while only a third said they were cutting back on IT spend. Intriguingly, 36 percent of the respondents didn’t know if their competitors were increasing or decreasing their IT outlays. That’s a remarkable gap in business intelligence, given the importance CFOs appear to place on technology.
Only one technology capability was deemed absolutely crucial or very important by over 60 percent of finance managers in the poll: Real-time analytics. But nearly 80 percent of the respondents reported that improved customer service was an important IT investment goal. In fact, well over half of the finance managers in the study responded that showing one face to customers is absolutely crucial or very important.
Technologies that CFOs say are overrated? Well, only 30 percent of the respondents indicated that electronic procurement was real important. And fewer than one in four said collaborative software was crucial to their businesses. That’s bad news for the scores of software vendors who have recently jumped into the collaborative computing arena.
Time Enough at Last?
This will come as no big surprise to any finance executive who’s been involved in an ERP, B2C, or E-procurement rollout: CFOs say they’re spending more time on technology matters than ever before.
That’s another of the findings from the CFO Research Services/Getronics survey. The executives in the poll say they spend, on average, nearly 16 percent of their time on IT issues. Finance managers at larger companies — revenues between $5 billion to $25 — spend even more time on technology. Indeed, within the next three years, CFOs at some large companies will likely be spending 20 percent of their time dealing with IT concerns. Martin Slursarz, senior vice president of finance at Discover Financial services, says technology issues already take up a quarter of his work time.
The reason for this uptick in attention from finance staffers? For starters, more companies are outsourcing technology functions these days. Choosing the appropriate vendor — particularly one that won’t go belly up in six months — requires the due diligence skills of an investment banker. That’s not an expertise many CIOs possess. “We’re working more with partners and outsourcing as opposed to doing everything ourselves,” Slusarz notes. “So vendor selection is critical.”
Choosing the right platform is also crucial. Many CFOs report that their companies are moving back to a centralized, thin-client computing architecture. The switch from information fiefdoms to open data systems requires a meticulous, detail-oriented kind of mind. Sound familiar? William Graber, senior vice president and CFO at McKesson Corp., says numerous acquisitions have left that company with a hodgepodge of applications, operating systems, and databases. “Over the past 18 months,” Graber says, “we have used a much more rigorous process to put consistency in our infrastructure, both applications and data centers.”
Graber says centralization is helping McKesson management better gauge the return on its technology investments. Indeed, 86 percent of the respondents in the CFO Research/Getronics survey said they use at least one financial metric to measure IT funding. Some 64 percent of the finance managers said they use a straightforward ROI calculation to assess tech projects. About the same number indicated they use payback period to measure their tech investments. Only 42 percent said they look at internal rate of return numbers when evaluating IT spend. Interestingly, about one in three of the finance managers in the survey said they use EVA to help make investment decisions. What’s more, 15 percent of the respondents indicated they use EVA as their primary finance metric for evaluating IT projects.