It’s not what you have; it’s what you do with it.
Yes, information technology sharpens a company’s competitive edge — but only if management learns how to master it for maximum impact.
So say finance executives responding to a survey by CFO Research on the investment outlook for new technology tools. In the survey, 112 finance executives at mostly small and midsize U.S. businesses weighed in on the competitive use of IT, and in particular their companies’ ability to fully harness advances in areas such as mobile technology, big data and cloud computing.
The results raise a key question: How will companies learn enough about new technologies and new capabilities to get the most out of them? Based on their responses, finance executives understand what’s at stake. Nearly all survey respondents (90 percent) agreed that better use of IT would meaningfully improve business performance at their companies. And almost as many (84 percent) saw it as necessary for staying competitive.
That need is especially critical for younger, smaller and more ambitious companies looking to leverage new technologies so they can shift more resources toward innovation and growth. As the COO of a small technology company said, his company will be relying on advanced technologies to help it “adapt to growth from a new start-up to second or third stage.”
Of course, it’s not as if the mere presence of technology confers any advantage. Finance executives envision helping their companies prevail not just by supplying management with more information, but also by translating that data into valuable insights. By getting more out of technology, they can devote less of their time to compiling reports from spreadsheets and other sources of data.
When asked what compels them to upgrade finance’s information capabilities, the majority of respondents (56 percent) indicated they are looking to provide management with more-useful information (see Figure 1, above). Gaining more-sophisticated analytical capabilities came in second, cited by 43 percent of respondents. These kinds of advances can, as the chief executive of a small technology company said, help with “keeping up with the effective use of data we collect.”
Better Tools, Better Managers
For nearly three out of four respondents (73 percent), the rationale behind getting better financial information systems is so they can provide better information tools, such as performance dashboards, for management use. A finance manager in a $100 million-plus transportation company wrote, with evident relief, that his company’s planned upgrades would “finally provide better reporting tools.”
But having the tools is no guarantee that they will transform management practices. For example, even among those who already have performance dashboards in place, 83 percent said they need to improve their use by management. The numbers were nearly identical (85 percent) for those who are already using advanced business analytics or business intelligence applications. Clearly, finance executives expect to invest in getting better at deploying these kinds of information tools for competitive advantage.