Recently, I sat down with our fractional CFO, Debi Corrie, to ask her some questions about how CFOs view technology and digital-strategy investments. Debi, who has over 30 years of experience as a Chief Financial Officer (CFO), Certified Public Accountant (CPA) and financial advisor, is the founder of Acumaxum.
How can digital strategies and technology increase profitability?
Debi answered, “I have seen the positive impact that technology has on a company. It allows it to grow faster, compete with larger companies and reach customers globally. Websites are no longer a marketing expense; they are capital investments that enable businesses to scale quickly.”
Gartner reported in May 2022 that over 78% of CFOs planned to continue the same level of digital initiatives or scale up their digital initiatives. Per Alexander Bant, Chief of Research in the Gartner Finance Practice, companies that make the right digital investments see 2.7x higher customer retention, 1.5x higher customer satisfaction rates, and 1.9x higher average order value.
Our case study on GARED Holdings highlights several ways its new platform created value for the company. One included the ability to download product information digitally by dealers and ending the need to print a catalog. By taking that one action, GARED immediately eliminated a major expense upon implementation.
What are CFOs concerned about right now?
Debi commented, “In a world of rising costs and inflation, CFOs are concerned about the impact of increasing costs on their organizations. As they face higher wages, interest rates and delivery costs, CFOs are looking for investments that can take their companies to the next level. Instead of reducing IT spending, they are working with their IT departments to develop smart digital strategies and technology to increase profits and productivity.”
Our clients outsource their digital properties’ design, development and hosting to us so that they have one team to plan and execute their digital strategies quickly while ensuring high quality and availability. This also allows companies’ internal IT departments to focus on key infrastructure projects. Based on an EY 2022 report, companies are planning to spend 5.8% of revenue on digital technologies, with an expected average return on digital investment of 7.6%. In other words, a small business with $20,000,000 in annual revenue would invest $1,160,000 for the year.
The importance of key metrics
Debi shared how critical key metrics are in understanding the return on investment (ROI) and attributing a specific investment in technology to revenue increases or cost savings.
Spry recommends taking a systematic approach to understanding the key business problems or opportunities your company is trying to address and developing a business case for the investment. Identifying success factors at the beginning and measuring the success afterward (and over several periods) will help company leaders measure the impact of the company investment.
Some key metrics include:
- Conversion rate (tracked with Google Analytics)
- Number of qualified leads
- Average online sales
- Reduction in customer service calls
- Cart-abandonment rates
What is the impact of digital security on a company?
“Cybersecurity is also a big concern for CFOs and IT departments. Employees can now access their company email and files on cell phones and home computers. Consequently, digital security has become a bigger challenge. Investments in antivirus software, malware software and employee education play a major role in prevention,” said Debi.
According to Statista, as of 2022, the average cost of a data breach in the United States amounted to $9.44 million, up from $9.05 million in the previous year. The global average cost per data breach was $4.35 million in 2022.
If you are looking for some ideas on how to educate your team about security, check out our blog on Passwords, Phishing (and other "P" words).
What do CFOs expect from their vendor partners?
Debi’s number one expectation, which she and her peers constantly discuss, is for the company to always see the value in what they pay to vendor partners. “We, as CFOs, need to understand the financial impact on the company. What will happen if we don’t make this investment in our website or application?” Debi stated. “We may not understand all of the technical terms, but sharing the impact on our customers' reputations, employees and product/service is something we can understand. If a change will improve our customer experience and increase orders, we should be able to measure those online orders to see that improvement.”
The four key reasons for cost overrun on a project are:
- Bad estimates
- Scope creep
- Poor risk management
- Lack of communication
The ways in which Spry Digital helps prevent cost overruns and delays include:
- Work with users and stakeholders to understand the business problem being solved
- Take a holistic view of the digital product
- Develop a strategic approach to understand prioritized functionality and balance ROI
- Be agile within a retainer budget to adjust priorities and functionality identified during discovery
- Maintain alignment through a detailed project plan and regular communications
- Create requirements that are translated into user stories and include testing criteria
What challenges are you facing with your digital investments?
What challenges are you facing with your digital investments? Please share them with me at firstname.lastname@example.org, or schedule a 15-minute call with me to talk about the digital challenges you face in your company.