CFOs, Digital Technology and ROI

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Digital Strategy

Recently, I sat down with our fractional CFO, Debi Corrie. I wanted to ask her how CFOs view technology and digital-strategy investments. Debi has over 30 years of experience as a Chief Financial Officer (CFO) and CPA. Specifically, she is the founder of Acumaxum.

How technology increases profitability

I first asked how digital strategies can increase profits. Debi answered, “I have seen the positive impact technology has on a company. For instance, it allows a business to grow faster and compete globally. Websites are no longer just a marketing expense. Instead, they are capital investments that enable businesses to scale quickly.”

Furthermore, Gartner reported in 2022 that over 78% of CFOs plan to scale up their digital initiatives. Companies that make the right investments see 2.7x higher customer retention. Additionally, they see 1.9x higher average order values. Our case study on GARED Holdings highlights this value. By digitizing their product info, they immediately eliminated a major printing expense.

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 often outsource their digital design and hosting to us. By doing this, they have one team to execute strategies quickly. This also allows internal IT departments to focus on key infrastructure. According to an EY report, companies plan to spend 5.8% of revenue on technology. In fact, they expect an average return on that investment of 7.6%.

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.

 Average cost of a data breach in the United States from 2006 to 2022 (in million U.S. dollars). Image courtesy of Statista.

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:

  1. Bad estimates
  2. Scope creep
  3. Poor risk management
  4. 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 sheila.burkett@sprydigital.com, or schedule  a 15-minute call with me to talk about the digital challenges you face in your company.