5 ways CFOs can use cost transparency to add value to their business
In this shift to digital, the CFO has become an essential player. It has always been the finance function's responsibility to protect critical assets and fulfil its core responsibilities, but the role has become exponentially more difficult.
Whatever your vision for your organization's future is, one thing is certain: it will be harder than ever for business leaders to compete in the digital age if they cannot process information efficiently and transform it into deeper insights faster than ever.
In today's environment, the CFO is a key stakeholder responsible for overseeing all financial management activities related to programs and operations, including large IT budgets. However, cost transparency and Technology Business Management (TBM) are available to help.
TBM providing value for CFOs
Here are five benefits of using cost transparency for CFOs:
1) Align spending with priorities
Financial decisions can be driven more efficiently by using IT metrics in the TBM framework. CFOs can make strategic decisions based on cost transparency and address risk by shifting spending according to business priorities.
2) Get a better understanding of what drives IT costs
Identifying the highest cost areas in IT is difficult without cost transparency. The TBM framework can help CFOs quickly identify uncategorized costs and allocate specific systems more accurately at the Cost Pool level for example.
3) Ensure that IT expenditures can be tracked effectively
CFOs can answer complex questions such as: "Why do cloud costs fluctuate so much?" with an effective approach. Understanding these costs, the CFO can know how IT dollars are spent and how they result in value.
4) Identify the right performance metrics to facilitate leadership decisions
The CIO and CFO can collaborate on data-driven value conversations to determine the company's most valuable KPIs and make appropriate decisions.
5) Gain a deeper understanding of the actual cost of IT
It is possible for CFOs to begin tracking real IT costs by creating a mapping of the financial systems and the method by which expenses are tracked (Expense type, cost centre, etc.).
Value conversations with CIOs
Budget restrictions and limited resources can make informed decision-making easier when data-driven recommendations are available. Creating a strong partnership with the CFO can make TBM adoption easier and facilitate data collection.
The CFO can discuss the factors that influence IT spending with the IT department. In turn, this facilitates one of the key responsibilities of the CFO: ensuring IT spend is being managed effectively.