2021 CFO Survey Insights From 1500 Global Finance Leaders: CFOs are Prioritizing IT Investments to Fund the Digital Enterprise

Hari Candadai

GVP, Thought Leadership & Research at Rimini Street

Learning Objectives

CFOs are transcending the finance function to becoming technology savvy business leaders architecting their companies’ recovery and growth phases in 2021 and beyond.


A recent global survey, conducted by Dimensional Research and supported by Rimini Street, of over 1500 finance leaders reveals CFOs are leading the charge leveraging digital to spur business growth and drive transformation. This requires active partnering with the CIO to prioritize and invest in the right technologies, including artificial intelligence (AI) and machine learning (ML), automation, cloud, and analytics - determining the economic viability of each IT initiative and maximizing ROI.




  • Prioritizing IT investments

  • Becoming the architects of digital transformation

  • Driving growth and shareholder value


"The Rimini Street model exactly pays half of what you're paying today..."

Hari Candadai

GVP, Thought Leadership & Research at Rimini Street

Transcript

CFOs are transcending the traditional finance function to becoming technology savvy business leaders architecting their company’s recovery and growth phase as well into 2021 and beyond.


Hi, my name is Hari Candadai, and I run the Global Top Leadership and Research Program at Rimini Street. Thank you so much for taking the time to join us in the session today.


A recent global survey conducted by Dimensional Research and supported by Rimini Street of over 1500 finance leaders clearly shows that CFOs are leading the charge when it comes to digital transformation to drive business growth. That requires active partnering with their CIOs to prioritize and invest in the right digital technologies like AI and machine learning, automation, cloud, analytics, but also determining the economic viability of every single IT investment to maximize their ROI.


In this session, we’ll take a look at these findings in detail, and to see how your peers, CFOs, and finance leaders are prioritizing IT investments, becoming architects of digital transformation, and driving growth and shareholder value. Before I get into the presentation, let’s get the legal disclaimer out of the way. The net of this is that the content that is being shared today is subject to the intellectual property rights of Rimini Street. You can read it in its entirety when we share with you these slides as well.


Alright, so here is the ground that we will cover today. First, I’ll take just a few minutes to give you a feel for the scope of the survey—the demographics, so you have an idea how they ground the survey covered. Next, we’ll take a look at each of the major findings and dig deeper. Let’s make sure that we understand the key takeaways from the respondents’ responses. Finally, I will wrap up with how over 4000 signed clients off Rimini Street have saved over $5 billion, adopting some of the most practical cost optimization strategies, including third party support for their ERP applications and databases, so they can free up their precious resources—people, time, and money to invest in digital enterprise.


Here’s a little bit about the survey itself. Over 1500 CFOs and Finance Executives completed the survey from across 13 different countries. As you can see, they’re across different industries as well as spanning from Financial Services and Technology all the way to Education, Wholesale ,and Distribution, so good variety there. From a company size perspective, over $200 million and up to over $5 billion is whether respondents were in terms of company size, so you get a feel for the good mix of the respondents here.


Let’s take a look at the survey findings itself, but here are the major highlights. Finding number one, CFOs are bullish when it comes to digital transformation. CFOs see clear business value and ROI from optimizing existing technology investments. Many of you may have invested millions of dollars in your ERPC systems or other back end systems for example, or infrastructural investments. As you can see, they want to maximize and optimize what they already have in place. When it comes to new investments, finding number three, CFOs expect short ROI timelines for technology investments that are new, and we’ll take a look at why that might be the case as we go along here. Finally, a strong CFO-CIO partnership is critical to success. Most CFOs believe that it’s very important to be aligned with your CIOs, especially during the current times to make sure that you’re prioritizing the right IT investments that’s going to help a company. Those are the major survey findings.


Now let’s take a look at each one of these in detail. Let’s start with a digital transformation—the finding number one. Digital transformation—it’s very clear—is a top CFO priority ,as you see here. New digital transformation investments are the top driver of increased technology spending. 80% say that it’s in their top five priority. Over 60% say that digital transformation is in their top three corporate priorities. 71% believe that digital transformation is critical to their company’s success. 95% say that the right technology investments—again, the key word here,—right technologies investments is important to recover from the COVID-19 situation. 73% believe that the COVID-19 situation has resulted in an increase in digital transformation investment, and we’ll take a look at why that might be the case as well.


Here are a few questions for you to consider based on finding number one: Are you prioritizing digital transformation? If you are, where are you in that journey today? Are you prioritizing the right digital investments? When I say the right digital investment, these are investment that’s going to help your customers. It’s not based on vendor decisions. It’s not even based on your business choices, but are you making the investments based on what your customers need? Consider that, and if you’re not prioritizing digital transformation, why not? It’s now a good time to start thinking about how you can invest in digital transformation, especially when 80% of your peers believe that it’s in their top five corporate priorities, so definitely time to think about digital transformation.


Let’s go to the next finding here. IT spending priorities must be tied to business value and ROI. I think this headline says it all. The question is: Where are CFOs focused and how are they prioritizing their IT spend? Let’s look at each one of these in detail. 67% say that they refuse to waste precious dollars on investments that don’t move the needle. Don’t move the needle, meaning anything that doesn’t contribute to increase revenue, decrease costs, take market share from competition, or improve efficiencies. If it’s not tied to any one of those strategic priorities, then CFOs don’t want to invest in those projects. 70% want to cut spending on non-essential IT investments. Non-essential meaning, if they’re not supporting a company or a strategic priority, then it should not get funded. They want to cut that spending no more “nice to haves” during these times, of course. That’s 70% of respondents saying, “It’s time to focus on the most important investments.” 77% say, “We’ll find a way to fund digital transformation initiatives with demonstrated ROI.” This is great news for CIOs and IT leaders listening. CFOs will fund projects that have demonstrated ROI, so have a clear and compelling business case when you go to your CFO to get the funding you need for the project for the most important and prioritized projects.


Let’s look at some of the numbers on the right hand side. The question was: What were your favorite IT initiatives? Here are the top three. 44% say that they want to optimize what they have in place already. If there’s no need to rip and replace something if it’s working perfectly fine, then they want to focus on optimizing those investments and extending the life and value of what they already have in place today. 40% say that they want to invest in revenue generating technologies. These are technologies like customer experience or new point of sale—any technology that’s going to contribute to new revenue is going to get prioritized. 39% say that they want to focus on process and efficiency initiatives. These are some of the top initiatives that the CFOs are focused on.


Now, let’s talk about the ROI that CFOs expect today. When evaluating technology investments, what is your expected ROI timeline? Nearly half say that they want to see investments or ROI in less than two years, especially given the current uncertainty and market condition. That doesn’t seem to be an appetite for any long drawn out projects like ERP migrations or ERP upgrades that may take years and have your best and brightest people tied up. No more any big bang projects, but they’re looking at projects that’s going to give them a clear and compelling ROI within a 2-year period and that’s what most of the CFOs have responded to. Short term ROI is important.


Here are some questions to consider when you are thinking about prioritizing your IT investments based on ROI. What are the main considerations when you’re prioritizing your IT projects? What lens do you put? How do you know which IT investments to invest? Are you optimizing? This may be a great question for your CIOs as well and other IT leaders: Are you optimizing what you already have in place today and that’s working? Are you focused on projects that’s going to help move the needle for the business versus doing something just for the technology’s sake or because of pressure from a certain vendor to replace their technology with the latest version? What IT projects are being prioritized? Just a few questions for you to think about, and to have in your conversations with your CIOs and IT leaders based on the survey.


The last finding here: strong CFO-CIO partnership will benefit the business. 92% agree that a successful CFO has a great relationship with their CIO counterparts today. 88% want their CIO to engage on new initiatives before the business plan is being developed. This shows that it’s becoming a two way street. The CFOs are moving out of the traditional finance function, as I originally mentioned at the beginning of the presentation. They want to be more involved in technology decisions, and vice versa, the CIOs have to become well-versed with the terminologies and articulating the ROI and sharing a business case. They need to speak more of the business talk with their CFOs, so it’s great to see that both of those are working and CFOs wanted to work. There are 88% want to be involved in these new initiatives before the business plan is being developed or fully developed. 77% say that their relationship has strengthened in 2020, so why has that strengthened? Why has the relationship between CFOs and CIOs strengthened? I think some of these reasons may be obvious.


Let’s take a look at the first one. 52% say that the focus on security, especially when it comes to working from home and remote environments. Security, as you all know, has become a big topic. The investments that go with it, and hence, that forged a stronger partnership with the CFO and the CIO.


Compliance. With so many things changing in the last year, with many new governmental regulations and tax regulations to take advantage of to help companies with dealing with the crisis, I think compliance became a top initiative. That required partnering as well, and of course, the risk that was presented by the COVID situation. These are obvious reasons that the CFOs and CIOs came together last year, and became a much stronger relationship than ever before.


The second reason is also very important. 50% say that the need to collaborate to make nimble technology decisions. This is about being able to be flexible, and constantly prioritize, and reprioritize IT investments, so you are focused on the investments that makes most sense for the business. The only way to do that is when you have a strong CFO and a CIO partnership. This is the detail that was shared.


Here are some questions. Are you partnering with your CIO? If not, why not? Now is the time to do that. If so, how are you partnering? When are you getting involved in these technology decisions? Do they come to you at the very end or do they present a business case? Do you get involved upfront or does that depend on the size of the decision or the scope of the technology decision? Where are you in that continuum from your finance office to moving towards becoming more technology savvy? If you have, how did you strengthen your CIO relationship? These are some questions based on the survey that will help continue to foster a strong relationship with your CIO. That was the net of the findings from the CFO study itself. I’ll point you to the report at the end of the presentation, so you can take a look at these findings in more detail.


This final segment is about if digital transformation is so important, why are companies still struggling? Well, it’s clear that one of the biggest barriers to digital transformation is managing your IT budget. What you see on the left is the situation that most companies are in. This is a Gartner statistic, saying that 90% of a typical IT budget goes towards keeping the lights on. Just towards maintenance and supporting what you already have. 90%, that leaves only 10% to focus on all these transformational initiatives—AI, machine learning, cloud computing, automation, analytics, everything that we saw that CFOs want to focus on—just 10%. If this is the reality of the situation, how can CIOs make the CFOs vision a reality unless they shift to the right? That equation has to shift from 90% 10% to at least 60, 40, or even 70%, 30%? How do companies do that?


This segment will talk about some of these cost optimization strategies that we have seen in over 4000 signed clients at Rimini Street, and what they are doing. Here are the five pillars of IT optimization and savings that can create funding and resource options to invest in your digital initiatives.


Let’s start with the very first step: Reducing your total software support and operating costs. Take a look at your earpiece systems and your databases. How much are you paying today in maintenance fees? Are you getting the value from that? That is where Rimini Street clients all started. Shifting that budget equation from 90, 10 to 60, 40, or 70, 30, whatever that balance is right for you. Start taking a hard look at the software support and database cost that you have in place today and see if it’s now the time to move or consider a model like third party support to drastically or dramatically reduce that cost.


The next thing you can do is see if you can improve your application management outcomes. Do you have an application managed services provider in place today to help run and manage your technology environments? If so, is that relationship helpful? How much are you paying for it? Are you getting the benefit from that relationship or is it time to look at another vendor? Maybe perhaps a consolidated partnership so you can have one vendor for your support as well as your AMS services like Rimini Street.


The next thing you can do is, are you still in the data center business? If so, you need to get out of that business to host your applications in the cloud. There are some great companies like AWS and Google Cloud Platform or Azure that can help with that. Maany ministry clients have stopped investing in new data centers because it’s so capital intensive, and they’ve shifted their environments, their ERP environments to public cloud models like AWS and Google and Azure. Once you’re in the cloud, see how you can manage the environment in the cloud. Make sure that you have the right process, people, expertise to help manage and optimize your environments in the cloud.


Finally, take a look at your software license landscape. Have you optimized your licenses? Do you have what you need or more? If you do, look at that in detail. You’ll be surprised how much savings can be possible if you optimize your software licensing landscape and there are experts who can help do that as well for you. These are just the five strategies we have seen within the ministry client base on how to create this additional funding and resource options.


Now, let me give you a feel for what is the potential savings with a model like Rimini Street third party support, especially when it comes to your ERP applications like Oracle or SAP, or even databases. Rimini Street is the leader in third party support, supporting ERP applications if you have SAP and Oracle in place today and databases, we can support that. The model is very simple. Whatever you’re paying in annual maintenance fees today, it’s exactly 50% off.


Let me very quickly go through the model with you so you understand how much savings is possible when it comes to your total ERP cost of maintenance. Let’s look at if you’re paying, in this example, $2 million. If that’s what you’re paying to SAP or Oracle today, when you move to the right, what you will pay with Rimini street is a million dollars, so it’s 50% off. This model has been based on over 200 Rimini Street client ROI studies, and this is how the math works. $2 million if that’s what you are paying today, the reality is, that you’re paying nearly $4 million or twice that amount in the total cost of maintaining and managing your VRP investments. Where are the additional costs? If you focus on the left hand side, what are the additional costs that make up that $4 million that may not be obvious? $2 million is the check that you write to SAP and Oracle—what we call the tip of the iceberg—but beneath that, beneath the waterline, so to speak, are all these additional and hidden costs. The first is the cost to upgrade and migrate when there is no need. This goes back to the finding that CFOs want to maximize and optimize what they already have in place today. If there’s no business case to upgrade and migrate, then don’t do it. In this case, if you’re paying $2 million, the study says that, on average, it’s twice that in order to upgrade to the next version, so $4 million. That happens once in four or five years, so if you annualize $4 million over a 4 or 5-year period, that’s the $800,000 that can be avoided by not being forced to upgrade or migrate.


The next category beneath that is support for your customizations. If you have a customized environment, SAP or Oracle will not support those customization. It’s either an external partner or your internal resources supporting those customization. That is a significant amount as well. In this model, it’s about $600,000 for customizations.


Finally, the last category is called self-support. The burden is on your IT teams to find the right fix when you get bundles of patches and fixes from SAP and Oracle. Your IT teams are burdened with finding the right fix that is most applicable to your environment. That regression, testing, and hopefully, not breaking other things in the mix is a significant component of this hidden cost, according to this study that we did. Also the fact that your resources are hunting for resolutions online themselves—all of this adds up to that $4 million.


If you move to the right hand side, as I said, the Rimini Street model exactly pay half of what you’re paying today—a million dollars, and everything else beneath it goes away. You can upgrade when the time is right for you, and when there’s a compelling ROI to move to the next version of SAP or Oracle, but not just be forced to do it just to stay supported. You can gain that flexibility with Rimini Street. Then, support for customisations is included as part of the Rimini Street model, so that burden goes away as well. Then, we provide a very tailored support model for your ERP and database instances so we can make sure that your systems are running smoothly and full compliance, and we take care of that. All of that means that you have freed up approximately 75% of what you were paying originally.


In this case, $3 million from $4 million to a million dollars—that’s $3 million to invest in all these digital technologies that CFOs want to focus on: cloud and customer experience, mobile analytics, AI, and Internet of Things. This is one strategy of those five pillars. This is one strategy that over 4000 clients, including 168 of the Fortune 500 and Global 100 companies have used to free up their people time and resources.


As I mentioned, over 4000 clients switched to Rimini Street. A very quick snapshot about the company itself. Founded in 2005. We have over 1500 employees today globally. As I said, over 4000 clients, 152 of the Fortune 500, and the number that the statistic that we’re most proud of is the client satisfaction 4.9 out of 5 with five being the highest across thousands and thousands of surveys that we get on a quarterly basis from our clients.


As you can see, the products that we support today as part of the third party support model includes the Oracle and the SAP, families of applications and databases. We also are providing AMS offerings for SAP, Oracle, and Salesforce environments. Third party support as well as AMS services.


Till date, we have estimated that our clients have saved over $5 billion in savings that has been repurposed to all these digital investments that we’ve been talking about, and recognized by industry experts as the leading independent support provider for ERP software as well as application and databases.


Here’s the link to the detailed CFO report that we went through at a high level. Please take a look at it and see if you can get more details on any of those topics.


Finally, if you have any questions any time, please send me an email. Again, my name is Hari Candadai—HCandadai@RiminiStreet.com. Thank you so much again for taking the time to watch this presentation. I would love to continue the conversation. If you have any questions anytime, as I said, please send me an email. Looking forward to talking to you or having the opportunity to answer any questions. Have a wonderful rest of the conference. Thank you.


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