5 practical tips for CFO IT spending

Prophix ImageProphix May 30, 2024, 8:00:00 AM

Recently, we talked about the impact of capital expenditures on both the short-term and long-term financial health of an organization. One category of CapEx that CFOs grapple with consistently is spending on technology. Finance professionals are frequently tasked with measuring the value and the return on investment for IT expenditures across the company, even when they don’t interact with that technology themselves. They need to be especially careful and take a sophisticated approach when it comes to spending on budgeting and planning technology.

To help CFOs and other finance pros make more confident buying decisions, CEO Alok Ajmera shares practical advice for finding the best solutions and the most dependable vendors and partners.

5 tips for CFO IT spending

1. Think past the immediate

“Buyers need to become a little more sophisticated. They focus on one pain point—budgeting is a disaster, the close process is terrible, cash forecasting is challenging. But if you invest time, energy and money, you want to buy a solution that can grow with you. More CFOs are thinking about the ecosystem strategically; they want to solve the acute pain, but they also want to continuously add value.”

Historically, processes within the Office of the CFO are isolated and the tech stack is fragmented, which leads to inconsistent experiences, disconnected systems, and disparate databases. Bringing all your key processes – from budgeting and planning to financial close and consolidation – under one financial performance platform is a long–term investment. You can solve the problems you face today on a platform that can grow with you as you and your team evolve.

2. Clean up the data first

“You can have a complex, sophisticated vision for what you want out of a budgeting and planning system, but if the data is not mature and scattered across dozens of systems with no way to collect and harmonize it, that’s a problem. [Implementation] projects can then run incredibly long, and the buyer risks never getting to value. As buyers move to modern architectures, they are overhauling their core systems and cleaning up their data, but [data management] is still not as sharp as it needs to be if companies want to benefit from all the cool, data-driven technology available.”

Data integration on a centralized platform stops the hassle of managing disparate data across systems and spreadsheets. With centralized data integration, all your applications use and share the same data, keeping everyone on the same page and reducing any additional risks for errors.

3. Check that value received > price

“The cloud pitch from vendors is, ‘Just sign up. And if you don't like it, drop it.’ When buying on-premises systems, 90 percent of the lifetime cash was already spent. In the cloud, for some solutions, you can just as easily cancel as buy the service. But for a complex, massive piece of software, you need to prepare a year or two ahead if you want optionality at renewal time. If the value received for your ABC ERP solution is no longer greater than the price paid, start the journey.”

4. Read the reviews

If a vendor has a history of treating customers poorly or ratcheting up the price, you can find out in advance. You can go online for unfiltered feedback on how customers are treated after they sign the contract. Do your due diligence. Does the software have the capabilities to solve my problem today? Does it have the capability to solve my problem tomorrow? But also, who am I partnering with, and is this a partnership or a vendor relationship?”

Often during the buying process, software vendors offer an opportunity for customer reference calls, where potential buyers can speak to real customers and gather feedback and insights into the implementation process. Industry analysts also offer non-biased reviews and validation that you can use to build your case.

5. Don’t buy hype

AI technology will be incredibly disruptive for the Office of the CFO. But AI is also at peak hype cycle. Everyone wants to talk about it, whether they have something materially AI generated or not. The truth is most of the AI being generated is not through B2B application vendors. We stand on the shoulders of giants—the Microsofts and Amazons of the world. These deeply rooted technology companies are the ones doing all the research and work on AI. We’re saying, ‘OK, OpenAI, you've created something that has no purpose. Can I create a purpose for it? Can I take that tool and wrap something around it to add value?’ Should a CFO buy business software today based exclusively on AI? No. They should ask which vendor has the most robust AI roadmap. That will help future-proof their investment.”

How to get the most out of your IT budget

A dedicated platform helps you control your financial outcomes with accuracy and precision. With an integrated platform, you can eliminate disparate tools and vendors and bring everything under one roof for shared data, enhanced security, and increased efficiency. Learn more about making confident buying decisions in our Financial Performance Platform Buyer’s Guide.

Quotes used in this article originally appeared in Finance & Accounting Technology Briefing, a newsletter from StrategicCFO360 and the CFO Leadership Council.

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