That’s a headline that should grab the attention of all finance professionals but before I expand on it, let’s put the subject, TEM, into context.
As recently as August Gartner revealed the results of this survey, conducted in July this year, of 226 CFOs that found that digital acceleration was shown to be their top spending priority for the coming 12 months. 98% of respondents stated they will protect digital investments and of those, 66% revealed they plan to increase their investments in the category. CFOs continue to pursue strategies aimed at mitigating the impact of inflation on margins by implementing cost cutting measures. The Gartner survey confirms that CFOs also remain determined to protect their digital investments and are embracing plans to pursue automation as a means of driving down expenditures.
Now let’s take the conversation back to that attention-grabbing headline. We have found that CFOs are not only investing in a broad set of technology tools but specifically adopting processes that are automated via the Internet of Things (IoT). There are obvious reasons why CFOs should fully support IoT projects, and these include cost reductions; increased cash flow and predictability – all are top of the list. However, this proliferation of IoT devices and the data they transmit obviously holds implications for TEM with its ability to provide business critical insights and functionality by integrating with and aggregating IoT ecosystem data. Gartner highlights the increase in connectivity expenditures for IoT solutions and reveals that CFOs leveraging existing TEM services to manage IoT connectivity can reduce the cost impact by at least 30%.
Retaining control in the face of technology sprawl
Organisations are losing control of expenses when confronted with increasing technology sprawl. Management of a growing range of services, vendors, platforms, and contracts supporting digital enterprises has become a complex and time-consuming task leaving many CFO’s virtually scrambling as they attempt to reconcile and allocate technology expenditure. This is compounded by the use of archaic manual methods, plus a range of disparate management solutions that do nothing to include vital information nor highlight unnecessary spending.
CFOs today are faced with data-rich environments where automation and efficiency at scale are key success factors. This in turn leads to the need to collate, manage, understand, and connect disparate and often complex data sets which are commonly ‘owned’ by different individuals and departments within an organisation. Data can also reside in various applications, servers, portals and/or spreadsheets. By aggregating and connecting the relevant data sets, the organisation is empowered to deliver powerful analytics, reports, dashboards and the tools necessary to ensure that every IoT device is visible and accounted for in terms of its profit metrics, consumption and associated metadata.
With so many technologies and trends out there vying for a CFOs attention – it is hardly surprising that old habits and antiquated methods are often opted for when faced with choosing the right solution from a bouquet of complex and bewildering tech options. Gartner recommends that CFOs prioritise finance automation investments by creating an iterative, multiyear roadmap to hyper-automation, including multiple concurrent and aligned initiatives. They go on to say that CFOs should also develop a business-led approach toward automation adoption by focusing on measurable improvements in business outcomes, rather than automation-focused goals. I would second that opinion.
Seeing – literally – is believing
I continue to be dismayed by the fact that many CFOs have not yet availed themselves of TEM software for the management of their company’s technology expenditure – I would go so far as to say that without it, you really cannot see the wood for the trees and that is regardless of industry sector, tech sprawl affects all businesses today.
What if a recce of your outgoing expenses leads you to discover, and purely by accident, that you are paying for mobile contracts for employees who have long since left the company, or that you are incurring because you are running software nobody currently uses? And that’s just the tip of the iceberg.
If you dig deeper, you may discover that you have overlooked vendor service fees that were never agreed to, or your systems are not set up to scale down on dollar-billed cloud services used for a long-since completed operation. Many businesses discover communications overspend at the end of a month – when it is too late to prevent the costs from being incurred, and yet others are finding that their IoT SIMs are proving far more costly to operate than they expected. These are just some simple examples and as incredible as it sounds – these unnecessary expenses can amount to millions per annum.
As far back as 2020 and just under a year into the pandemic and harsh lock-down environment – Gartner reported that 82% of CFOs surveyed at that time indicated that the adoption of advanced data analytics technologies and tools was a top priority for them. TEM platforms support analytics, strategic planning, and financial forecasting, and enable organisations to benchmark performance versus expenses across business units. They can also support an inventory component that serves as a single point of reference for all hardware, software, and licences, with alerts in place to notify the enterprise of contracts nearing expiry. This in turn informs future procurement, and even supports business continuity by providing CFOs with an ‘at-a-glance’ overview of their entire technology environment.
The bottom line is that tech sprawl can be tamed by purpose built TEM software which effectively monitors, manages and accurately allocates expenditure across the entire ICT environment.
As published in CFO South Africa.