Survey Analysis: Critical CFO Technology Needs: 2015 Gartner FEI Study

G00280250 Survey Analysis: Critical CFO Technology Needs: 2015 Gartner FEI Study Published: 18 August 2015 Analyst(s): John E. Van Decker, Christopher Iervolino The 2015 Gartner Financial Executives International CFO Technology Study provides significant insight into CFOs' thinking about technology. Understanding how your IT organization compares with these important benchmarks provides an opportunity to improve your strategic IT plans. Key Findings Organizations are still struggling with analytics. CFOs take advantage of the Nexus of Forces and digital business. Cloud usage is increasing for many finance-focused applications. CFOs have an increased appetite for business applications and business analytics investments, but security is still a major concern. Corporate performance management (CPM) applications continue to lead business intelligence (BI) and analytics investments. CFOs have major influence on technology as many IT decisions are shifting to business areas. Most think IT is not transformational and that a Pace-Layered Application Strategy is needed. Postmodern ERP approaches to business applications are firmly established. Recommendations Benchmark your organization against the results of this study to understand where you are in relation to your peer group. Become a key strategic partner with finance/cfo to steer the IT function. Build the mindset that there are no IT projects only business projects. Determine where cloud and mobile can be used for quick wins to address persistent business problems. Consider how to take advantage of leveraging digital opportunities.

Target technology projects where you have deficiencies, as your competitors may be making significant investments in IT and could gain market advantage if you do not act. Table of Contents Survey Objective... 3 Data Insights... 4 Organizations Are Still Struggling With Analytics... 4 CFOs Take Advantage of the Nexus of Forces and Digital Business...7 Cloud and Mobile Usage Increases for Many Finance-Focused Applications... 12 CFOs Are Focused on Applications and Analytics but Security Remains a Major Concern...19 Financial and Strategic CPM Applications Continue to Lead BI/Analytics Investment... 24 CFOs Have More Influence on Technology as IT Decisions Shift to Business Areas...27 Most Think IT Is Not Transformational A Pace-Layered Application Strategy Is Needed...32 Postmodern ERP Approaches to Business Applications Are Firmly Established...38 Methodology... 43 Demographics...44 Gartner Recommended Reading... 46 List of Figures Figure 1. Top Areas Needing Support... 4 Figure 2. Top Areas by Size... 5 Figure 3. Most Improved (Trend)... 6 Figure 4. Nexus of Forces Adoption...8 Figure 5. Nexus of Forces Use Cases...9 Figure 6. Nexus of Forces End Users...10 Figure 7. Nexus of Forces by Department and Use Case...11 Figure 8. Business Applications Cloud Adoption... 13 Figure 9. Time to Support More Than Half of Transactions on Cloud Infrastructure... 14 Figure 10. Time to Support More Than Half of Transactions on Cloud Infrastructure (Trend)... 15 Figure 11. Business Applications Mobile Adoption... 17 Figure 12. Business Applications Mobile Adoption (by Size)... 18 Figure 13. Most Important Investment Now... 20 Figure 14. Most Important Investment (Trend)... 21 Figure 15. Most Important Investment by Size... 22 Page 2 of 47 Gartner, Inc. G00280250

Figure 16. Top Investments Next Three Years...23 Figure 17. Business Analytics That Need Updating...25 Figure 18. Updating Analytics Technologies By Company Revenue...26 Figure 19. CFO Influence Over IT Investments... 27 Figure 20. Reason for Increased Influence... 28 Figure 21. Where Does the CIO Report?...29 Figure 22. Roles Authorizing Technology Decisions...30 Figure 23. Roles Authorizing Technology Decisions (Trend)... 31 Figure 24. Role of the IT Organization...32 Figure 25. Role of the IT Organization (Trend)...33 Figure 26. Perception of Benefits Realization... 34 Figure 27. Perception of IT Organization Performance... 35 Figure 28. Perception of IT Organization's Capabilities...36 Figure 29. Relative Performance Digital Opportunities... 37 Figure 30. Preferred Approach to Implementing ERP Applications... 39 Figure 31. Preferred Approach to Implementing ERP and Other Enterprise Business Applications by Size... 40 Figure 32. Preferred Approach to Implementing ERP and Other Enterprise Business Applications (Trend)... 41 Figure 33. Organizations Postmodern Approach... 42 Figure 34. Organization Profile...45 Survey Objective The scope of the 2015 Gartner Financial Executives International CFO Technology Study encompasses the IT perspective of the senior financial executive (such as the CFO, controller, director of financial systems or business planning director/vice president) in the enterprise, as well as the finance organization. This is the 17th year for the study and the seventh year where it was done in partnership with Gartner. In this research, we refer to executive as the CFO. In this study, we gained CFOs' insights from 169 online surveys on: The CFO's role in technology: How the CFO is involved with and influences technology decisions, and what are the priorities and current constraints. The CFO's investment preferences: What processes need technology improvement and how CFOs prioritize technology investments. Although there are many consistencies with the prior years' findings, there are just as many standouts this year that are described below. Gartner, Inc. G00280250 Page 3 of 47

Data Insights Organizations Are Still Struggling With Analytics Finding: The majority of technology deficiencies identified in this study can be addressed by making strategic improvements in analytics, including financial and strategic CPM investments. For the last five years we have asked CFOs to identify where there is room for technology improvement, achieving very similar results (see Figure 1). Figure 1. Top Areas Needing Support Survey questions: Please select the top priorities in your organization that currently need improved technology support. Of the processes you just selected, which one needs the most improvement in technology support? We presented respondents with 14 business process areas and asked them to select the top three that need improved technology support; then we asked them to select the one area that needs the most technology improvement. All but reducing operating expenses are directly linked to business intelligence (BI), financial CPM and strategic CPM analytics (although it can also be argued that a better view of the business through BI will provide a baseline and an opportunity to measure the progress of cost reduction). BI, analytics and performance management are the top areas for CFO IT interest. Most technology constraints concern the lack of business insight/bi availability, and the inability to use business Page 4 of 47 Gartner, Inc. G00280250

applications for process efficiency. The top business process areas that need technology investment are facilitating analysis and decision making (60%, down from 62% in 2014), followed by improving the quality of data for decision making (52%) and the ongoing monitoring of business performance (51%, down from 57% in 2014). New selections to survey were added due to the increased number of Gartner client inquiries on the topics, resulting in high selection rates. Creating more accurate planning and forecasting results (40%) and more closely aligning operational and financial planning (39%) show the increasing focus on improvements needed in enterprise planning processes. Figure 2 looks at the results according to the size of the organization. Figure 2. Top Areas by Size Survey question: Please select the top priority in your organization that currently needs the most improvement in technology support. Gartner, Inc. G00280250 Page 5 of 47

When asked what needs the most improvement, Figure 3 shows responses compared to the prior four years of the study. There has been a steady increase in creating/maintaining an enterprise view of business relationships, highlighting the need for improved collaboration across inter- and extraenterprise views, as well as improved analytics across business relationships, and this is consistent with prior years where this has been the top choice. Figure 3. Most Improved (Trend) Survey question: Please select the top priority in your organization that currently needs the most improvement in technology support. These results are consistent with those of the last five years, which show that organizations are still struggling to make progress with BI and analytics. CFOs have been dealing with aging systems, and there are new tools available to support enterprise processes like performance management. Many IT organizations have made initial investments, but these tend to be tactically focused and don't Page 6 of 47 Gartner, Inc. G00280250

address the more fundamental issues of data quality and consistency, which require CFOs and finance teams to work closely with BI specialists in IT (see "How to Align Business and IT to Succeed With Business Analytics"). Recommendations: Identify the priorities for BI and analytics, and understand that there is no single technology solution for all your challenges (see "A Business Analytics Framework for Finance Business and Decision Processes"). Ensure that the most experienced finance people are deployed to work with IT to build and implement a comprehensive BI, analytics and performance management strategy. These are typically the finance "super users" with expertise in using spreadsheets and reporting tools to meet the needs of the CFO and other finance professionals. Evaluate new product offerings in self-service data preparation and smart data discovery to identify how these could empower finance users. Implement process, organizational and cultural changes to support validation and promotion of BI and analytics content created by finance users. CFOs Take Advantage of the Nexus of Forces and Digital Business Finding: Cloud, mobile, analytics and social capabilities are increasing their adoption today in the enterprise. The top part of Figure 4 shows an increase in organizations that use the Nexus of Forces today. At least 81% of organizations use at least one of the nexus capabilities (social, mobile, cloud and information). Just 12% don't use any of them at this point, and 5% do not know. A fifth (21%) use just one capability, 22% use two, 21% use three and 18% use all four. The bottom half of the figure shows that there have also been significant increases in information/analytics (44% to 58%), cloud (46% to 57%) and mobile (44% to 47%) since last year's survey. An increase in demand to use at least two of the nexus capabilities is seen in 81% of organizations in the study. Gartner, Inc. G00280250 Page 7 of 47

Figure 4. Nexus of Forces Adoption Survey Question: What elements of the Nexus of Forces do you use? Have you seen an increase in demand for the Nexus of Forces? For Figure 5, we asked responding CFOs to explain in their own words how the demand to use at least two of the nexus capabilities manifested itself in their organizations. When we categorized the responses, we found that use cases that involve customer engagement are driving these demands, followed by better collaboration and employee engagement. Page 8 of 47 Gartner, Inc. G00280250

Figure 5. Nexus of Forces Use Cases BYOD = bring your own device Interestingly, the CFO views finance as the primary user of the Nexus of Forces, with sales and marketing following closely. However, we believe this represents the bias the senior finance executive had when they filled out this survey, responding with the finance organization perspective in the forefront (see Figure 6). Gartner, Inc. G00280250 Page 9 of 47

Figure 6. Nexus of Forces End Users Survey Question: Who are the end users of the Nexus of Forces in your organization? Use cases for the Nexus of Forces focus on improving collaboration with customer and employees (see Figure 5). Figure 7 shows the data broken out by department and by use case. Page 10 of 47 Gartner, Inc. G00280250

Figure 7. Nexus of Forces by Department and Use Case BYOD = bring your own device Survey questions: Who are the end users for these solutions within your organization? What are the end users trying to do with the Nexus of Forces? Gartner, Inc. G00280250 Page 11 of 47

Recommendations: IT leaders must engage with CFOs and discuss in which of the use cases they see benefit. This represents an opportunity for IT to engage with the CFO in a positive technology investment discussion. Analytics/information is a top area of concern for the CFO, and this may be a good initial area to target. Also, CIOs should use this interest to show how wider investments in cloud and mobile technology could deliver benefits to the office of finance and across the organization. Although these nexus capabilities will be more of a concern in 2016 and beyond, IT organizations must communicate how more-effective business platforms can be used to deliver better architectures for business applications that are "top of mind" for the CFO. For example, it would be a good move to include the CFOs in mobile device deployment to allow them to access finance information and analytics. Organizations should consider getting projects going in the high-priority areas (technology expense management, for example) if they have not already done so, and use the lower-priority areas to trial the technology and generate some interest from CFOs in wider mobile adoption (board books on mobile, for example). Cloud and Mobile Usage Increases for Many Finance-Focused Applications Finding: The projected use of the cloud has doubled over the 2014 study for business analytics, integrated financial management applications and many CPM areas. Cloud interest has increased significantly for business applications this year. Figure 8 shows where CFOs think their enterprises are in terms of cloud deployment. Page 12 of 47 Gartner, Inc. G00280250

Figure 8. Business Applications Cloud Adoption SEC = Securities and Exchange Commission; XBRL = extensible Business Reporting Language. Survey question: What phase best describes your adoption of a cloud model (including SaaS) for each of these business applications? All of the business applications have increased from 2014 to 2015, with the exception of travel expense management, which held constant at 55%; financial consolidations, which was constant at 46%; and reconciliations management that dropped by 1%. Financial management applications experienced the large increases with integrated financial management applications up from 47% to 53%. Management reporting was also up from 45% to 49%; financial modeling/business analytics up from 41 to 46%; budgeting, planning and forecasting up from 38% to 45%; board books up from 28% to 30%; and SEC submissions, XBRL assignment up from 18% to 20%. When asked if and when organizations see that they will move their transactions to the cloud, the results in Figure 9 were obtained, where 82% of organizations see this in their future. Gartner, Inc. G00280250 Page 13 of 47

Figure 9. Time to Support More Than Half of Transactions on Cloud Infrastructure Survey question: When do you estimate that your finance organization will support more than half of its transactions on a cloud infrastructure using a SaaS model? One in 10 organizations are already there, with another 10% planning to achieve this cloud migration in 2015. Another 19% will plan to meet this in 2016, 8% in 2017 and 35% in 2018 or later. When compared to the 2014 study, more organizations have pushed this out to the future, with 35% citing 2018 or later in this year's study against 30% in 2014. Figure 10 shows how the same question was answered over the past four studies. Page 14 of 47 Gartner, Inc. G00280250

Figure 10. Time to Support More Than Half of Transactions on Cloud Infrastructure (Trend) Survey question: When do you estimate that your finance organization will support more than half of its transactions on cloud infrastructure using a SaaS model? There are many reasons why firms are reluctant to move to the cloud. We asked respondents to offer reasons why they have pushed the movement to cloud for more than half of their transactions out to 2018 or later (or never). When we categorized these answers, we found that security is the major area of concern. We often hear of security concerns, but there are many examples, like SEC/ XBRL and reconciliations management, where cloud is the preferred solution. Another major concern is the current investment in ERP and legacy solutions that are not cloudbased and that would be costly to convert over to these solutions. Still, fewer organizations have answered that they will never move to the cloud. Gartner, Inc. G00280250 Page 15 of 47

Over the next three to five years, finance applications will deliver mobile benefits. Today, the primary targets for mobile are executives (those using board books, narrative reporting or management reporting, for example) who need to interact with finance data and reduce their reliance on armies of management accountants with spreadsheets. Although much mobile capability is now focused on the executive and on providing mobile devices with a concise set of metrics for visibility into company performance companies need to build a vision of how mobile strategies for financial applications will be rolled out during a multiyear period. During the next four years, we will see more financial management functionality being exposed through mobile apps, but we will not see complete suites available on these devices. Even so, vendors must monitor mobile developments that can augment financial management, and incorporate mobility to be competitive. They should also monitor vendor roadmaps for mobility innovations and plan on how to use these new capabilities. Figure 11 shows the current and planned uses of mobile capabilities, with all categories achieving an increase from 2014 to 2015. Page 16 of 47 Gartner, Inc. G00280250

Figure 11. Business Applications Mobile Adoption Survey question: For each of these business applications supporting the finance organization, what stage best describes your organization's adoption of mobile devices for that application? Figure 12 shows that the demand for mobile applications is significantly higher in larger organizations where they rank higher in every category. Larger organizations will more likely have the IT resources to help enable platforms and have a mobile device policy. Gartner, Inc. G00280250 Page 17 of 47

Figure 12. Business Applications Mobile Adoption (by Size) Survey question: For each of these business applications supporting the finance organization, what stage best describes your organization's adoption of mobile devices for that application? Recommendations: Consider the cloud for providing new functionality. If your on-premises solutions have aged, and you want to improve specific areas (such as mobile expense reporting) cloud solutions may fill functional gaps. Consider a hybrid approach for specific functionality or departments/units when the incumbent on-premises solution is not cost-effective, or is too complex to meet your business needs, and you want to improve usability. Analyze the cost structure to implement a cloud approach to ERP and financial management solutions and evaluate applications to ensure that the solution can address the complexities of your business processes. Page 18 of 47 Gartner, Inc. G00280250

Deploy mobile capabilities where you need to increase participation in the financial management process, including workflow and collaborative development of financial budgets and plans. Firms should develop distinct mobile plans for groups of users, including board members, executives, middle managers, line managers, analysts and input users. Underlying any plan for financial management on mobile devices, is the vision for mobile devices and for their acquisition in the enterprise. Understand the different variants of cloud ERP (see "How to Select the Right Cloud ERP"), because there is a range of cloud-delivered options available. Plan to meet the integration challenges of a hybrid cloud/on-premises ERP environment as users increasingly adopt cloud solutions for noncore processes, if you intend to keep core ERP systems on-premises (see "Address Integration for Hybrid Postmodern ERP and Business Application Scenarios"). CFOs Are Focused on Applications and Analytics but Security Remains a Major Concern Finding: Nexus forces like the cloud are impacting enterprise business applications forcing the move to postmodern ERP with a hybrid of on-premises, private and public cloud deployments, while there is increasing demand for mobile and analytics capabilities. This is in line with our findings from the CIO survey in which "renovating the core" such as ERP was highlighted as a key foundation for digital business. Consistent with 2014, CFOs are looking to make investments in business analytics and business applications. This year we again asked respondents to choose their top three technology-related investment areas in order of importance. With over 20 options to choose from, the top three are enterprise business applications, business analytics and IT security. A significant change from the 2014 study is the rise of security as the second critical investment for IT. This is due to the concerns of putting corporate data outside the firewall in a public cloud solution. In past studies, BI/analytics were first and business applications were second in investment preference, as seen in Figure 13. Gartner, Inc. G00280250 Page 19 of 47

Figure 13. Most Important Investment Now Survey question: Which three technology-enabled capabilities are the most important areas of investment to your organization today, in order of importance? When compared to last year's study (see Figure 14), business analytics increased from 34% to 39%, business applications decreased from 47% to 34% and IT security increased from 31% to 37%. Cloud business, big data and business process management all increased to 20%. Page 20 of 47 Gartner, Inc. G00280250

Figure 14. Most Important Investment (Trend) Which three technology enabled capabilities are the most important areas of investment to your organization today in order of importance? When considering company size, IT security was the top investment for larger organizations (with more than $1 billion per year in revenue) and business applications was the top investment for smaller organizations (less than $50 million a year in revenue). Gartner, Inc. G00280250 Page 21 of 47

Figure 15. Most Important Investment by Size Survey question: Which three technology-enabled capabilities are the most important areas of investment to your organization today/in the next three years, in order of importance? When looking ahead three years, business applications again regains the top position with business analytics dropping to third place. CFOs believe that their business analytics issues will be Page 22 of 47 Gartner, Inc. G00280250

addressed in three years. While organizations have reduced focus on business application investments right now, they are preparing for investment in the next three years (see Figure 16). This implies that they are getting ready for a shift to the next wave of applications from megavendors that are replatforming and moving their applications to the cloud. This will allow them to take advantage of more digital business capabilities in future versions. We frequently speak with clients that are waiting for newer technologies to achieve wider market acceptance before they are willing to invest. Figure 16. Top Investments Next Three Years Survey question: Which three technology-enabled capabilities will be the most important areas of investment to improve your business over the next three years? Gartner has identified a group of four major technology trends (social, mobile, cloud and information) that will drive technology planning, investment and usage in 2015 and beyond, and has called this the Nexus of Forces. Enterprise organizations are being challenged to adapt as these Gartner, Inc. G00280250 Page 23 of 47

technologies and the data that results from their adoption and deployment internally to the enterprise and externally with customers expand exponentially. Mobile, cloud (including SaaS) and information are all priorities according to our survey results. Social, which scored low in terms of technology initiatives, was the exception. Recommendations: Ensure your ERP strategy takes account of the shift to postmodern ERP and the disruption caused by cloud and other nexus forces (see "2015 Strategic Road Map for Postmodern ERP"). Encourage CIOs to engage with CFOs to discuss IT security issues, especially those related to the move to cloud. This may be an opportunity for IT leaders to get the CFO to support security initiatives (see "Budgeting for the SaaS Security Gap"). Establish a prioritization process that balances the workload for support resources responsible for maintenance and project work. Involve the business in prioritizing maintenance and project service requests. Align your postmodern ERP roadmap with your organization's digital business strategy and underpinning technologies. These could include in-memory computing (IMC), the Internet of Things (IoT), big data and cloud integration technologies, as well as development strategies, such as bimodal IT. Use Gartner's "How to Develop a Pace-Layered Application Strategy" to synchronize business needs with the technical response categorized by systems of innovation, differentiation and record. Ensure that you discover and incorporate shadow IT projects into your strategy. Financial and Strategic CPM Applications Continue to Lead BI/Analytics Investment Finding: CFOs rank CPM investments highest in priority for BI/Analytics investment. Financial and strategic CPM applications continue to rank highest in priority for investments in BI/ Analytics. The financial CPM investments shown in Figure 17 include performance measurement, and financial reporting and consolidation. Strategic CPM investments include budgeting, planning and forecasting; predictive modeling; and customer/product profitability. Performance measurement/scorecards slips slightly from 52% in 2014 to 49%, financial reporting and consolidation is up from 50% to 43%, budgeting/planning/forecasting is up from 48% to 43%, and customer and product profitability rises from 40% to 29%, we believe mostly due to the availability of corporate planning and modeling solutions that make this approach easier. Organizations plan to take advantage of more advanced capabilities, particularly in larger organizations. As such, big data increases from 17% to 22%, where statistical analysis and predictive modeling remain constant. Page 24 of 47 Gartner, Inc. G00280250

Figure 17. Business Analytics That Need Updating Survey Question: Which of these business analytics technologies is your organization currently upgrading or enhancing? Figure 18 shows that large enterprises will use both financial and strategic CPM suites at levels above small and midsize businesses. Gartner, Inc. G00280250 Page 25 of 47

Figure 18. Updating Analytics Technologies By Company Revenue Survey question: Which of these business analytics technologies is your organization currently upgrading or enhancing? Recommendations: Understand the benefits of financial CPM and strategic CPM, and how these can be integrated into your BI platform and performance management business processes. Assess CPM product versions and roadmaps regularly to gauge the benefits of version upgrades or product component expansions. Ensure that these purchases are strategic and complement other aspects of your overall performance management and BI frameworks. Page 26 of 47 Gartner, Inc. G00280250

CFOs Have More Influence on Technology as IT Decisions Shift to Business Areas Finding: The CFO's influence over IT is consistent and, in many organizations, is growing. In larger organizations, as expected, the influence is significantly less. In large organizations, CIOs are less likely to report to the CFO. The midsize group (revenue between $50 million and $1 billion) had the highest occurrence (58%) in the study. Keep in mind, however, that this study might be biased by the fact that technology-minded CFOs are more likely to complete the survey. They would care more about IT and, in many cases, the IT function reports to them. Those that had a cursory interest in IT would have been less likely to complete the study. The CFO continues to have a significant influence over IT investments, with more that 49% saying that this influence has increased, as shown in Figure 19. Figure 19. CFO Influence Over IT Investments CFO = chief financial officer Survey question: Compared to two years ago, how has the CFO's influence over IT investments changed in your organization? This increased influence is mainly due to the need to align IT with the business (29%, down from 31% in 2014), to increase efficiency of finance applications (20% up from 17%) and to meet return on investment (18%, up from 10%), as seen in Figure 20. Gartner, Inc. G00280250 Page 27 of 47

Figure 20. Reason for Increased Influence ROI = return on investment; CFO = chief financial officer Survey Question: What is the primary reason for the CFO's increased influence over IT investments in your organization? When we look at where the CIO reports (see Figure 21), as with prior studies, the majority answer across all organizations is the CFO (41%) with the CEO being second (36%). In smaller organizations, the CIO reports primarily to the CEO (52%) and secondarily to the CFO (24%). For midsize organizations, we see most cases of IT reporting to the CFO (52%) and then CEO (25%). Large organizations responded that IT reports to the CEO (41%) and then to the CFO (38%). Page 28 of 47 Gartner, Inc. G00280250

Figure 21. Where Does the CIO Report? CEO = chief executive officer; CIO = chief information officer; COO = chief operating officer Survey question: To which person does your CIO/IT director currently report? The CFO's role in authorizing technology has slipped a bit this year, as shown in Figure 22. Gartner, Inc. G00280250 Page 29 of 47

Figure 22. Roles Authorizing Technology Decisions CEO = chief executive officer; CFO = chief financial officer; CIO = chief information officer; COO = chief operating officer Survey Question: What role or function in your organization authorizes technology investment decisions? Figure 23 shows that, compared to the 2014 study, the CFOs role in authorizing technology investments slipped from 29% to 18%, where the influence of steering committees of IT and business area executives rose from 16% to 20%. This is evidence that many organizations are moving the investment decisions back to the business areas, particularly in light of cloud applications that are being led by business area executives. Page 30 of 47 Gartner, Inc. G00280250

Figure 23. Roles Authorizing Technology Decisions (Trend) Survey question: What role or function in your organization authorizes technology investment decisions? In large organizations, the decisions are primarily made by the committee (38%), and the CIO and CFO together (29%). In midsize organizations, decisions are made by the CEO (24%), the CIO and CFO together (19%), and the CFO alone (19%). In smaller organizations, the CEO (43%) makes the primary investment decisions. Compared to other Gartner surveys, this is substantially higher given the audience this particular survey attracts. However, the increase of the CFO's influence on IT acquisition decisions demonstrates the need for companies to ensure that their CFOs are educated in technology. It also underscores just how critical it is that CIOs and CFOs have a common understanding of how to leverage enterprise technology. This study shows that a significant proportion of CFOs have direct responsibility for IT. Therefore, the CFO will already be a key sponsoring executive and/or stakeholder in many organizations. Even in organizations where they are not responsible for IT, CFOs are increasingly key decision makers for technology investments, because they generally control an organization's budget and are involved in scrutinizing the largest-value items. Recommendations: CFOs need to be proactive in making technology decisions for all finance applications, ensuring that they have a financial system that supports the strategic objectives of their organizations. Gartner, Inc. G00280250 Page 31 of 47

CFOs and IT professionals need to understand how the CFO should be involved to ensure that the right IT investments are selected, and that they deliver the right benefits based on the organization's goals and strategies. Most Think IT Is Not Transformational A Pace-Layered Application Strategy Is Needed Finding: Few IT organizations are viewed as transformational. Providing a pace-layered analysis to your IT portfolio can help stakeholders understand new opportunities, as well as where your initiatives to date have led. Most organizations have enough IT champions to move these efforts forward. Figure 24 shows that most organizations still feel that IT has the ability to improve business efficiency (41%), and better enable business operations (20%). This would essentially align to "providing systems of record" in the Gartner Pace Layer Methodology. "Providing systems of differentiation" would include enhancing business operations (24%) and being a primary source of competitive advantage (11%). Few view IT as transformational (3%). However, this is marginally up from 2014 (1%) as shown in Figure 25. Figure 24. Role of the IT Organization Which of the above statements best describes the role your organization expects the IT organization to play on a consistent basis? Figure 25 compares 2015's results to the previous three years of the study. It also shows that IT is holding constant around its efficiency, enablement and enhancement with minor increases in being viewed as a primary source of advantage and being transformational. Page 32 of 47 Gartner, Inc. G00280250

Figure 25. Role of the IT Organization (Trend) Survey question: Which of these five options best describes the role your organization expects the IT organization to play on a consistent basis? When considering benefits realization, IT is losing fans. Figure 26 shows that the mean rating on a scale of 1 to 7 for IT is 4.1. From 2012 through 2015, IT cynics increased from 7% to 15%, those with a passive impression increased from 52% to 68%, and those that are IT advocates dropped from 31 to 16%. Gartner, Inc. G00280250 Page 33 of 47

Figure 26. Perception of Benefits Realization Survey question: How good is your organization at actually realizing the planned or promised benefits of IT-intensive projects/investments? What about for projects/investments in general? When asked about the performance of the IT organization, the mean answer was a 4.5 with 53% of organizations satisfied, as shown in Figure 27. Page 34 of 47 Gartner, Inc. G00280250

Figure 27. Perception of IT Organization Performance Survey question: How satisfied do you believe your IT organization's stakeholders are with the IT organization's performance and contribution? When asked about the IT organization's skills and capabilities, the mean answer was lower at 4.2, with 47% saying that IT had the appropriate skills, as shown in Figure 28. Gartner, Inc. G00280250 Page 35 of 47

Figure 28. Perception of IT Organization's Capabilities Survey question: To what extent do you agree that the IT organization has the right skills and capabilities in place to meet upcoming challenges? When asked if the IT organization was prepared to take advantage of digital opportunities, the mean was somewhat lower at 4. Only 34% believe that IT is well-positioned to take advantage of this opportunity, as shown in Figure 29. Page 36 of 47 Gartner, Inc. G00280250

Figure 29. Relative Performance Digital Opportunities Survey question: In your opinion, how does your organization compare to similar entities in terms of its ability to exploit digital opportunities? The demands of digital business (see "Get Ready for Digital Business With the Digital Business Development Path") require organizations to innovate with new business models and act immediately on "business moments." This requires the ability to transform existing business capabilities and to implement new business processes and capabilities to leverage digital opportunities and to do all of this with greater and greater speed while maintaining process and data integrity. A significant gap has developed between the business users of enterprise applications and the IT professionals charged with providing these applications. The business leaders are looking for modern, easy-to-use applications that can be deployed quickly to solve a specific problem or respond to a market opportunity. Meanwhile, the IT organization is typically working toward a strategic goal of standardizing on a limited set of comprehensive application suites to minimize integration issues, maximize security and reduce IT costs. These competing goals often lead to strategic misalignment. Business users often complain that, no matter what they ask for, IT tells them that they have to use the functionality in the existing application portfolio, or that they have to wait until the current multiyear rollout is finished, before the problem can be addressed. In today's dynamic business climate, with constantly changing business models, and users who are more aware of technology, this is unacceptable. Gartner, Inc. G00280250 Page 37 of 47

Gartner has defined three application categories or layers systems of record, systems of differentiation and systems of transformation to distinguish these application types and help organizations develop more-appropriate strategies for each. In what Gartner calls the Pace-Layered Application Strategy, these layers correspond with the notion of business leaders having common ideas, different ideas and new ideas. The same application may be classified differently in one company than another based on its usage and relationship to that business model. We expect to see applications move among layers as they mature, or as the business process shifts from experimental, to well-established, to industry-standard. It is the CFO's responsibility to allocate finance systems to different pace layers to help IT deliver more innovation and differentiation. This approach should be applied across the application portfolio. Recommendations: A pace-layered approach to applications can provide a foundation for working with the business to develop a strategy that can lead the enterprise to more differentiation and transformation. In the past, many companies have had a single strategy for selecting, deploying and managing applications. They may have had methodologies for classifying applications by value or technological viability, but they did not recognize that applications are fundamentally different, based on how they are used by the organization. Postmodern ERP Approaches to Business Applications Are Firmly Established Finding: ERP approaches are largely unchanged from 2012, but many organizations are adopting postmodern approaches to ERP that may cause tension between the CFO's goals and departmental/business-unit objectives. Some questions that were dropped after the 2012 survey were reintroduced this year to allow us to understand changes in business application product selection. Figure 30 shows the approach organizations are taking when consider ERP strategies. Page 38 of 47 Gartner, Inc. G00280250

Figure 30. Preferred Approach to Implementing ERP Applications Survey Question: What is your preferred approach to implementing ERP and other enterprise business applications across your organization? Figure 31 shows how strategies vary according to the size of the organization. Gartner, Inc. G00280250 Page 39 of 47

Figure 31. Preferred Approach to Implementing ERP and Other Enterprise Business Applications by Size Survey question: What is your preferred approach to implementing ERP and other enterprise business applications across your organization? When compared to 2012, there is little change to the CFO's view of ERP strategy, as shown in Figure 32. Page 40 of 47 Gartner, Inc. G00280250

Figure 32. Preferred Approach to Implementing ERP and Other Enterprise Business Applications (Trend) Survey question: What is your preferred approach to implementing ERP and other enterprise business applications across your organization? The CFO still tends to want a "single system" approach to ERP because it seems cheaper and offers integration savings. Postmodern ERP makes this more challenging to achieve because there are fewer "megasuite" solutions on the market. So this highlights tensions between CFOs (that still want a single system) and the business, which wants more of a postmodern approach, with more line-of-business solutions. The sourcing approach shows they recognize the vendor landscape has changed, but the constant desire for a single system shows they don't really "get" postmodern ERP. There is a role for the CIO to educate here. Figure 33 illustrates that, when asked about their approaches to business application strategy going forward, many demonstrate a postmodern ERP approach with 37% of organizations favoring a hybrid of on-premises and cloud offerings. Only 28% will buy applications solely from their ERP vendor. Another 28% will include ERP or megavendor offerings in the product evaluation, while 13% are moving away from a single vendor approach. This shows that the reality of ERP strategies is different to the CFO's desire for a "single system." Gartner, Inc. G00280250 Page 41 of 47

Figure 33. Organizations Postmodern Approach Survey question: Which of these statements are true for your organization's ERP environment? Many ERP systems and legacy business applications have lost business relevance and agility, and have become bloated, fed by the objective of becoming an all-encompassing megasuite. The reality is that these environments have become too large to change at the pace that business needs, or to reflect the flexibility and innovation needed. The advent of cloud computing which brings with it a new delivery model, new vendors, enhanced user interfaces and a faster functionality updates has fundamentally changed this market. Where once architectural coherence and full integration was favored, now it is domain relevance, functional innovation, ease of use, and agility that dominates the strategy. Page 42 of 47 Gartner, Inc. G00280250

This postmodern ERP environment, as defined by Gartner in 2013, continues to take hold, and today, old-model ERP strategies are becoming marginalized and will ultimately be circumvented as they are too complex, and have too many interdependencies, to cope with today's business demands. In addition, these demands for agility will increase significantly as digital business requirements place new pressures on organizations forcing business applications and processes to change with greater speed while maintaining their integrity and allow for the reimagining of business models. Recommendations: Educate business users and senior executives about postmodern ERP and help them understand that ERP is about more than choosing a single system and forcing it through the organization. Cite Gartner's "Survey Analysis: ERP Leaders Must Adopt Postmodern ERP Strategies or Risk Being Left Behind" to show that the majority of organizations have already moved away from a traditional monolithic ERP approach and that this trend will continue. Conduct a thorough assessment of the renovation needs of your current ERP solution and be prepared to be an early adopter of IMC-enabled finance systems if you see potential business value and want to build a stronger ERP foundation for digital business transformation. Don't be misguided by thinking that cloud solves your ERP problems or makes you digital ready. "Cloud ERP" is one of many deployment possibilities. Determine the flavor of cloud that best supports your needs. Ensure you align your postmodern ERP roadmap with your organization's digital business strategy and underpinning technologies (such as IMC, IoT, big data and cloud integration technologies) as well as development strategies, such as bimodal IT. Define the postmodern ERP skills gap in your organization, with a focus on integration technologies, cloud technologies, IMC, and negotiating and managing cloud services. Methodology The 2015 Gartner Financial Executives International (FEI) CFO Technology Study is in its 17th year, and 2015 is the seventh year that Gartner has provided the execution of the study and produced an analysis of the results. Gartner conducted 169 U.S. online surveys from October 2014 to May 2015. Of the respondents, 27 were sourced from Gartner's "Magic Quadrant for Corporate Performance Management Suites" and the remaining were sourced from FEI membership. Online surveys were distributed to qualified financial executives who understand their organizations' business strategies and the role that IT plays in supporting the business. The survey was shorter this year in an effort to improve participation. The survey was approximately 20 questions, so most of the questions that probed into areas of business applications, analytics and regulations were not included, but will be rotated into the study in the future. We believe that the results uncovered in prior years' studies for these areas still hold and would be consistent, based upon other Gartner research. Gartner, Inc. G00280250 Page 43 of 47

Demographics The survey invitation was sent out to senior financial executives in FEI. As anticipated, those that had an interest in, and influence on, IT responded. Of those, 44% were enterprise CFOs and 94% were involved in IT decisions, as shown in Figure 35. Page 44 of 47 Gartner, Inc. G00280250

Figure 34. Organization Profile Gartner, Inc. G00280250 Page 45 of 47

Gartner Recommended Reading "Magic Quadrant for Corporate Performance Management Suites" "2015 CEO Survey: Committing to Digital" "Postmodern ERP: When Staying With On-Premises ERP Is the Right Choice" "Use These Best Practices to Develop a Pace-Layered Application Strategy for Financial Management" "Survey Analysis: Core Financial Management Applications Deliver Benefits Both On-Premises and in the Cloud" Evidence This is the 17th year of the study, the seventh year that FEI and Gartner have collaborated. There were 169 responses to the survey. The survey was carried out online from October 2014 through May 2015. To qualify for the study, the respondent had to be a mid-to-senior financial manager, and knowledgeable about IT. The survey was approximately 20 questions. Page 46 of 47 Gartner, Inc. G00280250

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