Presentation Title - Financial Executives International

The CFO’s Impact on Technology Investment Decisions 2011 Gartner FEI Technology Study

John Van Decker Research VP, Gartner

Bill Overell President, Overell Solutions

® This presentation, including any supporting materials, is owned by Gartner, Inc. and/or its affiliates and is for the sole use of the intended Gartner audience or other authorized recipients. This presentation may contain information that is confidential, proprietary or otherwise legally protected, and it may not be further copied, distributed or publicly displayed without the express written permission of Gartner, Inc. or its affiliates. © 2010 Gartner, Inc. and/or its affiliates. All rights reserved.

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Purpose of the Study • Gain the CFOs perspective on information technology within the enterprise. It includes the following topics: - Economic Environment

- CFO Technology - ERP /Business Applications - Business Intelligence Applications

- Shared Services/Outsourcing - Regulatory - Role of IT CFO • 13th year of study – 3rd with Gartner as partner ®

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Financial Executives International OUR MISSION FEI’s mission is to advance the success of senior-level financial executives, their organizations and the profession. Since 1931, FEI has been connecting members through: Interaction Providing local and international forums for connecting you with your peers; Information Providing you with insight to assist in informed business decisions; Influence Providing authoritative representation for your interests; Integrity Providing the tools to advance the profession through ethical leadership.

Titles/Job Functions CFO, Executive VP, Senior VP, VP-Finance

60%

Controller

14%

Treasurer

7%

Other Titles

19%

Company Size: Annual Gross Sales Under $50 million

21%

$51 to $499 million

38%

$500 to $999 million

10%

$1 billion to $9.9 billion

24%

$10 billion or more

7%

344 Highly Qualified Responses in 2011 4 3%

5 18%

7. Extremely knowledgeable 47%

6 32%

Incomplete and responses not meeting threshold were excluded. 4

Their Role CFO IT Functional Role 2% IT CFO Functional Role 3%

Other 5%

Senior Finance Leader 15% Business Unit CFO 9%

Enterprise CFO 66%

75% of respondents were CFOs. 5

Their Industries Manufacturing-Discrete Professional, Scientific or Technical Services Manufacturing-Process Software - publishers or developers IT Service Providers Financial Services - all others except insurance Healthcare - providers, services Wholesale Distribution Retail - all others Energy - oil, gas, solar, other Healthcare - life sciences Insurance Education - higher education Government-regional, state or local Agriculture, Mining and Construction Financial Services - investment banking Government-federal, national or international Telecommunications Transportation - couriers, transportation services Healthcare - pharmaceuticals Utilities - electric, gas, water, sewer Education - primary or secondary Media Retail - hotels, restaurants

10% 8% 8% 6% 5% 5% 5% 5% 5% 4% 3% 3% 3% 3% 2% 2% 2% 2% 2% 1% 1% 1% 0% 0%

Source: 2011 Gartner FEI Technology Study, N=334

This study covers a broad spectrum of CFO opinion across industries. 6

Primarily North America, Global Reach Global-operating in a large number of organizations worldwide 18%

Regional-operating in a certain area of a single country 26%

Multi-nationaloperating in more than one country, but not global 29%

National-operating throughout a single country 27%

Source: 2011 Gartner FEI Technology Study, N=334

47% of respondents in the study have global operations. 7

What are today’s technology constraints? Creating an effective environment for sharing relevant information

42%

11%

Facilitating analysis and decision making

9%

Quality of the data used for business information

9%

Creating/maintaining an enterprise-wide view of business relationships

9%

Helping to position the organization for profitable growth

8%

Reducing enterprise operating costs

7%

Measuring product and customer profitability

6%

Integrating strategy with daily business operations and rewards

6%

Managing business risk

5%

Integrating the financial function with the overall enterprise

5%

46% 43% 32% 33% 43% 33% 29% 26%

Process needs improved technology support Process needs the most significant improvement in technology support

27%

Source: 2011 Gartner FEI Technology Study, N=334

Business Insight and Business Efficiency will drive IT spending. 8

Agenda • What is the role of the CFO in IT? • What is the IT investment climate in 2011? • What are the priorities? • How are ERP /business applications viewed? • How are business intelligence/analytics prioritized?

• What are the regulatory priorities? • How does the CFO view IT?

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Agenda • What is the role of the CFO in IT? • What is the IT investment climate in 2011? • What are the priorities? • How are ERP /business applications viewed? • How are business intelligence/analytics prioritized?

• What is the direction on shared services/outsourcing? • What are the regulatory priorities? • How does the CFO view IT? 10

Who authorizes IT investment? Steering Committee of IT and Business Area Executives

29% 18%

CFO

26% 27% 25%

CIO and CFO together

CIO Steering Committee of IT and Business Area Operational Managers

11% 5% 4% 4% 2010 2011

8%

Other

11%

The CFO has a more major role (51%+) then in 2010. 11

Where does IT report? Source: 2011 Gartner FEI Technology Study, N=334

33% 35%

Chief Executive Officer (CEO)

42%

Chief Financial Officer (CFO)

46% 13% 10%

Chief Operating Officer (COO)

Chief Administrative Officer

2% 2%

Currently reports to Should report to

Business Unit Leader President, (not CEO or COO) Other

3% 1% 3% 4% 5% 3%

Consistent with 2010 study, 42% of ITOs report to CFOs – it will increase 12

Agenda • What is the role of the CFO in IT? • What is the IT investment climate in 2011? • What are the priorities? • How are ERP /business applications viewed? • How are business intelligence/analytics prioritized?

• What are the regulatory priorities? • How does the CFO view IT?

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2011 Investment Expectations Source: 2011 Gartner FEI Technology Study, N=334

We expect the economic environment to be similar to 2010

40%

We expect the economy to stabilize at current levels

14%

We expect the economy to recover and grow compared to 2010 but not reach 2008 levels of economic activity

38%

We expect the economy to rebound and grow above 2008 levels of economic activity

Do not know

6%

2%

View of economic opportunity is conservative; 38% see growth in 14

IT Operational Spend Forecast 2012 vs. 2011

2011 vs. 2009 Increased by 10% or more 13%

Decreased by 10% or more 13%

Increased by 10% or more 7%

Decreased by 3-9% 15%

Increased by 3-9% 23%

Decreased by 10% or more Decreased 4% by 3-9% 7%

Increased by 3-9% 31%

About the same +/3% 51%

About the same +/3% 36%

Source: 2011 Gartner FEI Technology Study, N=334

IT operational spending expected to neutralize more in 2012 15

IT Capital Forecast 2011 vs. 2009

Increased by 10% or more 21%

2012 vs. 2011

Decreased by 10% or more 19%

Increased by 10% or more 18%

Decreased by 10% or Decreased more by 3-9% 6% 6%

Decreased by 3-9% 11% Increased by 3-9% 20%

Increased by 3-9% 30%

About the same +/3% 29%

About the same +/3% 40%

Source: 2011 Gartner FEI Technology Study, N=334

48% see an increase in capital spending in 2012 16

IT Investment Perspective We are continuing to invest where can be demonstrated competitive advantage

72%

33%

We are pursuing business process outsourcing BPO

14% 20%

We have deferred new projects.

20%

8%

We are pushing more responsibility out to user organizations

Current economy's influence Most influence

11% 7%

IT is renegotiating service agreements with business units to reduce maintenance and support.

24%

7%

We are cutting IT spending and/or staff.

5%

We are discontinuing certain non-mission critical applications and support.

5%

We are moving to on-demand/software as a service applications and support

4%

We are investigating newer technologies (Web 2.0, Service Oriented Architecture).

3%

We are continuing to invest where can be demonstrated business process efficiency.

2%

11% 15% 15% 38% 64%

Consistent with 2010 study, investment will continue where there is competitive differentiation and efficiency. 17

Agenda • What is the role of the CFO in IT? • What is the IT investment climate in 2011? • What are the priorities? • How are ERP /business applications viewed? • How are business intelligence/analytics prioritized?

• What are the regulatory priorities? • How does the CFO view IT?

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2011 Top Technology Initiatives Source: 2011 Gartner FEI Technology Study, N=334

1st choice

Business intelligence, analytics, performance management

23%

Enterprise business applications

2nd choice 24%

30%

10%

Data and document management & storage

6%

Service-oriented applications and architecture

6%

Mobile technologies

5%

7%

9%

Networking, voice and data communications (unified… 5%

8%

7%

8%

3rd choice 18%

6%

14%

10%

6%

Cloud computing

4%

6%

7%

Security technologies

4%

7%

5%

IT management

4% 5%

8%

Virtualization

5% 5%

6%

Governance risk and compliance applications (GRC) 2% 5% 5% Software-as-a-Service (On Demand Hosted applications) 3% 4% 3% Social networking 1% 1%5% Enterprise mash-ups 1% 0% Green IT 1% 0%

Business intelligence/analytics and business applications re-emerge in 2011 as top technology initiatives 19

2012 Top Technology Initiatives Source: 2011 Gartner FEI Technology Study, N=334

1st choice

Business intelligence, analytics, performance management

26%

Enterprise business applications Data and document management & storage Service-oriented applications and architecture

7%

Mobile technologies

8%

Cloud computing

7%

Networking, voice and data communications (unified… 5%

11%

9%

3rd choice 13%

11%

12%

8%

8%

8% 6%

7% 8%

7%

8%

IT management 4%

7%

5%

Governance risk and compliance applications (GRC) 4%

8%

5%

Security technologies

24%

21% 5%

2nd choice

5% 3% 7%

Software-as-a-Service (On Demand Hosted applications) 3% 5% 4% Social networking 1% 2% 6% Virtualization 2% 2%5% Enterprise mash-ups 0% 1% 1% Green IT 2%

Business intelligence/analytics will continue to be a priority in 2012. 20

Agenda • What is the role of the CFO in IT? • What is the IT investment climate in 2011? • What are the priorities? • How are ERP /business applications viewed? • How are business intelligence/analytics prioritized?

• What are the regulatory priorities? • How does the CFO view IT?

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Business application strategy Source: 2011 Gartner FEI Technology Study, N=334

Operate and maintain separate systems 7%

Other 2% Discontinue all disparate systems and implement a single integrated system for core areas 34%

Build new interfaces between existing systems 15%

Adopt best of breed applications and develop necessary interfaces 42%

Systems consolidation remains a focus (34%) but many still pursue best of breed applications first (42%) 22

Release strategy Implement as new Implement only releases become when installed available release is no longer Other 11% supported 3% 9%

Implement to remain within one release of current release 25% Implement only when substantial new functionality is provided 52%

Source: 2011 Gartner FEI Technology Study, N=334

Many organizations remain close to new releases while many seek a business benefit before upgrade 23

Configuration not Customization We implement the solution as is but are prepared to customize the solution to meet our needs in some business process areas 9%

We implement the solution as is out of the box with no changes, and change our business processes to fit the solution 29%

We implement the solution as is with no changes, adjusting our business processes if necessary to meet the functionality of the software solution 62%

Source: 2011 Gartner FEI Technology Study, N=334

89% of organizations seek to take advantage of application best practices, while many also implement vanilla. 24

Implementation Model – SaaS Gaining As Software as a Other Service or SaaS 2% 10% As an Application Service Provider or ASP solution 12%

A licensed software that your organization runs and maintains inhouse 76%

Licenced software will continue to be primary delivery platform 25

Business Applications Expectations 6 Provided business value Integrated with business processes

36%

23%

30%

Provided business insight

32%

Operated within expected cost range

31%

Achieved transactional excellence

7. Extremely important

25%

19%

15%

27%

Met the schedule

24%

Reduced risk

24%

17%

15%

9%

Firms are focusing primarily on improving business value 26

ERP Instance Preferences Business Units/subsidiaries make their own choice of ERP/integrated Other finance systems 1% Tiered approach 5% larger business units use one ERP system while smaller business units use one more appropriate for their size 11%

Single, global administrative ERP backbone, business units/subsidiaries choose their own operational systems 19%

Single, global integrated ERP system 64%

ERP consolidation is a preference, with 64% of organizations looking for a single instance ERP. 27

Agenda • What is the role of the CFO in IT? • What is the IT investment climate in 2011? • What are the priorities? • How are ERP /business applications viewed? • How are business intelligence/analytics prioritized?

• What are the regulatory priorities? • How does the CFO view IT?

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BI Investment in 2011 We don't have analytical and decision support technologies 10%

Yes, currently in the process 27%

No, with no plans to do this within the next 12 months 36% Yes, planning to within the next 12 months 27% Source: 2011 Gartner FEI Technology Study, N=334

54% of companies are making improvements in BI now or are targeting BI investments over the next year. 29

BI/PM Investment Focus - 2011 Source: 2011 Gartner FEI Technology Study, N=334

Planning/budgeting/forecasting

64%

Performance measurement/scorecard/dashboard

60%

Financial consolidation and reporting

51%

Customer and product profitability

44%

Data warehouse

41%

Statistical analysis

25%

Predictive modeling

22%

CPM applications lead the areas of BI investment from the CFO’s perspective. 30

Agenda • What is the role of the CFO in IT? • What is the IT investment climate in 2011? • What are the priorities? • How are ERP /business applications viewed? • How are business intelligence/analytics prioritized?

• What are the regulatory priorities? • How does the CFO view IT?

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XBRL Plans 44% 34%

13% 7% 2%

1% External reporting only

External External Benchmarking reporting and reporting and my supplement to replacement for organization's existing internal certain internal financial reporting reporting information to others in the market

No decision at this stage

Not applicable for my organization

Source: 2011 Gartner FEI Technology Study, N=334

XBRL planning lags most North American organizations. 32

XBRL Strategy Not impacted by regulatory requirement at present 15%

Purchase financial statement collaboration solution that has XBRL tagging 30%

Outsource XBRL tagging to financial statement publisher 24% Purchase XBRL tagging solution only without financial statement production 12%

Will do it all in Microsoft Office 20%

Source: 2011 Gartner FEI Technology Study, N=74

The market for financial statement generation/collaboration products Is growing with 30% looking for solutions. 33

IFRS Plans 39% 27% 16% 12% 6%

All conversion Planning and impact activities to be analysis in progress, deferred until closer but implementation to the required to be deferred until adoption date closer to the required adoption date

All conversion activities are in progress

Conversion activities Not applicable for are complete my organization

27% are still delaying work on IFRS, but major ERP changes require long lead times. 34

Role of IT in IFRS Source: 2011 Gartner FEI Technology Study, N=113 Active participant on IFRS conversion steering committee 5% Active participant on IFRS conversion project management office 14%

Other 5%

No role for IT Department in early stages of conversion 40%

Kept apprised of IFRS conversion efforts, but not an influencer 36%

40% of IFRS impacted organizations have not yet involved IT. 35

IFRS Strategy We plan on making addressing requirements in our financial reporting solution only 20%

We have no plans to address IFRS requirements from an IT perspective within the next 12 months 43%

We plan on managing all GAAP to IFRS activities offline in spreadsheets 8%

We are using this to justify a new ERP system to replace our We are using this to justify an ERP existing upgrade, where we will 1% configure IFRS requirements 4%

We envision minor changes to our ERP system 24%

Source: 2011 Gartner FEI Technology Study, N=334

43% of organizations may be surprised and may not be able to react to US IFRS requirements. 36

Agenda • What is the role of the CFO in IT? • What is the IT investment climate in 2011? • What are the priorities? • How are ERP /business applications viewed? • How are business intelligence/analytics prioritized?

• What are the regulatory priorities? • How does the CFO view IT?

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What are the expectations of IT IT is responsible for managing and operating technology systems and resources efficiently

28%

IT is responsible for enabling business operations by building and operating technology systems defined by the business

25%

IT is responsible for contributing to the enhancement of business operations by using technology proactively to raise business performance

35%

IT is responsible for being the primary source of the enterprise's competitive advantage as technology is a differentiator in enterprise products or services IT is responsible for the transformation of the enterprise's business model and the creation of new markets and rules of competition

8%

4% Source: 2011 Gartner FEI Technology Study, N=334

Only 35% of organizations see IT as being a strategic driver of business performance. 38

Room for improvement 6 Our IT organization has the funding to meet its commitments for 2010

28%

Our IT organization has clear and effective governance The CIO is a key player in determining the business strategy

Our IT organization is able to deliver against the enterprise's/ business unit's strategy

24%

Our IT organization has the right number of skilled people to meet business needs Our IT service levels meet or exceed business expectations

8%

22%

24%

Our IT organization delivers the technology innovations needed by the business

13%

24%

Our IT organization has the organizational and technical flexibility to respond to changing business priorities

7. Strongly agree

10%

7%

6%

21%

5%

19%

6%

18%

5%

Only 32% see the CIO as being a key partner in strategy 39

Key to IT investment success 6 Business ownership of the business case.

26%

7. Extremely effective 12%

Business case for the project

28%

9%

Program project management

28%

8%

Post implementation reviews

20%

Change management

17%

Project benefits are 'baked' into operating budgets and headcount Business reviews that concentrate on benefits harvesting

6%

15%

6%

14%

Formal business benefits audit Chargeback

6%

4%

11%

6%

2%

3% Source: 2011 Gartner FEI Technology Study, N=334

While technology may be a given, business partnership may be more critical to a successful IT relationship 40

Top 10 Key Observations (not prioritized) •

Gaining business insight and improving business efficiency are the top technology opportunities – top constraints are around BI

•

BI/PM top IT investment plans – CPM leads

•

35% view IT as being strategic to business performance

•

CFOs influence in IT is growing – 42% of IT reports to CFO

•

Organizations willing to spend where competitive differentiation and efficiency can me achieved

•

IT spending to recover in 2011, more capital investment as economy improves

•

Achieving business benefit from IT still a concern/opportunity, though 68% see benefits being realized

•

Reducing ERP instances with more vanilla implementation desired

•

XBRL and IFRS projects lag

•

Understanding and working with the business is key to IT success over technological excellence 41

Recommendations • Understand your CFO’s perspective on technology

• If you have not already, seek to improve the ITCFO partnership opportunity • Benchmark your organization to your peer group in the study to understand where you may need to target improvement • IT must focus on getting closer to the business in order to be viewed strategically

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2011 Gartner FEI Technology Study John Van Decker Research VP, Gartner

Bill Overell CEO, Overell Solutions

This presentation, including any supporting materials, is owned by Gartner, Inc. and/or its affiliates and is for the sole use of the intended Gartner audience or other authorized recipients. This presentation may contain information that is confidential, proprietary or otherwise legally protected, and it may not be further copied, distributed or publicly displayed without the express written permission of Gartner, Inc. or its affiliates. © 2010 Gartner, Inc. and/or its affiliates. All rights reserved.