“You go to war with the army you have,” former Defense Secretary Donald Rumsfeld famously remarked, “not the army you might want or wish to have.”
The same can be said of companies today, as they battle to capture market share and profits. But victory in business often goes to those who secure a technological edge. Looking to drive growth, many finance executives are steering their companies toward increased spending on information technology. What may be lagging, though, is the willingness among their colleagues to embrace new technologies and align them with business objectives.
Such are the findings of a recent survey conducted by CFO Research, in collaboration with American Express. The survey collected responses from 154 senior finance executives in the United States and the United Kingdom, representing a wide range of industries. Nearly 8 out of 10 respondents (78%) reported that their companies plan to increase real spending on information technology over the next year. Forty percent of all survey-takers, half of whom work at companies with revenue of between $100 million and $500 million, anticipate that they will increase spending by 10% or more. (To learn more about the results of the survey, “Supporting Growth with New Technologies,” please go to http://goo.gl/8B5tG0.)
During the recession, IT was primarily seen as a source of efficiency and cost reduction. But as the economy revives, companies are evaluating how emerging technologies, from Big Data analytics to cloud computing to mobile platforms, can support growth initiatives. “In past years, everybody talked about investment in technology to run your business. It was all about trying to corral the information from within your business,” said one survey respondent, the CFO of a maker of medical diagnostic systems. “Now we’re interested in technology that brings you the viewpoint from outside of your business to help management figure out where to take the products.”
Granted, cost cutting still ranks high on the finance function’s agenda for new technologies. In the survey, nearly half (48%) said IT could offer the most value to their growth plans by helping to cut costs. However, an identical number said they viewed technology’s top contribution as improving effectiveness, supplying insights to spur growth.
Big Data, Bigger Decisions
Virtually all survey respondents said they need to improve their understanding of Big Data analytics. A whopping 95% agreed that their companies need to be able to extract much greater value from financial and operating information over the next year (see Figure 1, above). How do they expect to do so? Primarily by better integrating systems (40%) and by acquiring or deploying new applications or analytical tools (38%)
Having the required analytical tools is only half the battle, of course; companies also need to enlist and train employees to interpret the data. “The inputs may be perfect, but then there is the skill of interpreting the output in the context of the decisions that need to get made,” said the CFO of a software company. “Big Data is only useful if it has predictive capabilities. And for it to have that, companies need to understand it better.”
Analyzing Big Data demands a companywide effort. Making the data available to the entire enterprise is a key component of shaping a culture that can extract maximum value from millions of rows of data. As one CFO put it: “The challenge lies in people not understanding how to harness that value for their purposes — and that’s where the investment needs to be made.” Nearly half of survey respondents either agree, or are not sure, about the statement that their companies “will seek to gain a competitive advantage by mastering Big Data analytics ahead of its peers.”
None of this, however, is likely to happen as quickly — or painlessly — as the hype sometimes suggests. “What is happening is evolutionary,” said the medical-company CFO. “Management isn’t sufficiently educated to make the transformation. Over time, that will be addressed.” That may explain why just one in five respondents (21%) said that making better use of Big Data analytics will be among their companies’ priorities over the next year.
A slender majority of respondents (55%) view cloud technology as offering their companies increased flexibility (offering improved ability to match IT capabilities with changing needs), with lesser numbers seeing the most value in cost savings and improved productivity (34% each) and time savings (27%). Still, only about a quarter of respondents said that their companies would focus on increasing their use of cloud computing over the next year.
Why the disparity between perception and action? Nearly half of respondents (46%) said that data security was their largest concern. Said one CFO, who is currently mulling the issue: “I’m not sure a lot of financial folks would like to see their data out in the cloud, with the associated security risks — unless they understand how it can be controlled. I’m not persuaded — not yet.” Such a wait-and-see attitude is likely what’s holding executives from reaching for the cloud.
Nowhere on the survey is there a wider gap between awareness and action than when it comes to integrating mobile technology.
An overwhelming portion of respondents, 77%, agreed that over the next year, their companies will need to make much better use of mobile technology. Senior finance executives also know what they’d like the technology to help them achieve — namely, improved access to and use of financial and business data. A plurality of respondents (37%) said that mobile technology can provide users with better data-query and data-retrieval capabilities than their current systems do.
And yet, despite their perception of mobile technology’s benefits, only 16% of respondents reported that their company had a formal, enterprise-wide plan for deploying it (see Figure 2, above). “A lot of us are struggling with what is appropriate in a mobile-technology policy,” said the software-company CFO. “‘Bring your own device’ is still attracting a lot of debate, and I don’t think companies have settled that.”
When will the debates over implementing policy around mobile technology — or Big Data analytics and cloud computing — subside? One CFO sees the reckoning coming sooner rather than later. “The technology is evolving faster and faster, and there is a generation that is adapting to that technology faster,” he said. “Another generation is holding the purse strings, and they are adapting more slowly.”
No matter how “exposed and vulnerable” the older generation may now feel, added the CFO, over time they will inevitably grow more comfortable incorporating new technologies and processes into existing ones. Sooner or later, they will see that in the battle for market dominance, new technology can provide a decisive advantage.