In years past, many corporate IT departments and their finance departments operated as independent fiefdoms, which could often lead to inter-departmental clashes and wasteful spending. Many IT professionals would gladly throw every possible resource into developing a great new technology or application, but there are limits to what any company can spend on research and development before the bottom line starts to suffer.
As a result, many modern enterprises, whether or not they claim to be “tech” companies, now route final authority for IT decision-making through their finance department. Oracle CEO Mark Hurd highlighted the shift at this year’s Modern Finance Experience conference when he noted, “About 60 percent to 70 percent of IT departments now actually report to finance, to the CFO.”
Every modern enterprise needs a capable IT department, no matter how much development and production they might offload to the cloud. But every modern enterprise also needs to manage its costs so that it has the resources to grow, both for today and well into the future. It’s no longer enough for today’s CFO to be a cost-cutting, balance-sheet-optimizing accounting whiz. The modern CFO should view their role as a combination of savvy financial management and smart technology stewardship, and should undertake both functions with an eye towards their company’s long-term success.
Does this mean that a CFO must learn how to code and get down in the trenches with their organization’s developers and network administrators? Not necessarily. Hurd comes from a sales and operations background, and he understands the importance of cloud computing and other technologies primarily from a cost-benefit perspective.
This is one key reason why he’s been such a vocal proponent of cloud computing. As he noted in a LinkedIn article published last year, “Companies can reduce costs 30% by simply moving to the cloud—reason enough for most companies to make the move (and many are). Think of that: You can strip out 30% of your IT costs without any reduction in performance and reliability.” A CFO doesn’t necessarily need to know how to set up a company-wide cloud solution like Oracle ERP Cloud to take advantage of its benefits to their bottom line. Understanding how cloud ERP can help their organizations, and working with IT staff to ensure it’s implemented carefully and comprehensively the first time around, can pay dividends for years.
Data from Oracle and from independent studies supports this approach. Nucleus Research found that cloud applications produce 3.2x ROI over on-premises systems. Cloud ERP’s advantages are evident even within finance departments, particularly where shared workspaces and AI-driven automation can significantly increase productivity and minimize the risks of data entry errors that can lead to reporting or compliance issues.
Hurd offered a compelling example during his Modern Finance Experience keynote, one relayed to him by Caesars Entertainment CEO Mark Frissora. As Hurd said, “Frissora talked about audit fees that are down more than 20 percent. They ran the company on 2,000 spreadsheets that are now gone.” How many data entry errors might crop up across 2,000 spreadsheets?
A CFO who understands their organization’s tech stack, and who understands why and how to make it better, is an essential part of any modern C-suite. A CFO who refuses to learn more about the technology that undergirds their organization is one liable to cost that organization money, and that in turn may lower their chances of remaining CFO for long.