# Why the CFO needs to mind the IT disruption gap
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2017-03-29
Category: TECHNOLOGY
Category URL: https://financedigest.com/category/technology
Meta Title: Digital Transformation: Impact on IT Procurement and
Meta Description: Discover how digital transformation is shifting IT procurement from central departments to business units, and the implications for CIOs and CFOs.
URL: https://financedigest.com/why-the-cfo-needs-to-mind-the-it-disruption-gaphtml

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**Matt Fisher**, VP – Marketing at Snow Software

With digital transformation becoming ever more crucial to business success, the way organisations procure IT is changing. “In 2016, just 17% of IT spending is controlled outside of the IT organization. That represents a significant decline from 38% in 2012. By 2020, Gartner predicts that large enterprises with a strong digital business focus or aspiration will see business unit IT increase to 50% of enterprise IT spending.” [\[1\]](#_ftn1) Technology budgets are moving away from a central technology department towards being the responsibility of the business unit using it. From HR procuring its own payroll [software to business](https://www.financedigest.com/how-to-choose-the-right-software-architecture-for-your-business.html "How to choose the right software architecture for your business") development choosing the best sales programme, a visibility gap is forming between what exists in the technology estate and what CIOs can measure. This gap is called the disruption gap.

However, the CIO is not the only C-suite member the disruption gap will affect. If not handled correctly, it could prove troublesome for the CFO too. The reasons for this are three-fold:

[**Digital transformation**](https://www.financedigest.com/apis-are-powering-the-acceleration-in-digital-transformation.html "APIs are powering the acceleration in digital transformation")

[Digital transformation](https://www.financedigest.com/evolution-not-revolution-digital-transformation-today.html "EVOLUTION, NOT REVOLUTION: Digital transformation today") is now key for any CFO tasked with ensuring their business is future proof. It is defined as the application of [digital technologies](https://www.financedigest.com/discrete-digitization-to-drive-the-assisted-reproductive-technology-market.html "Discrete digitization to drive the Assisted Reproductive Technology Market") to fundamentally change and update all aspects of business and society. The [benefits of digital transformation](https://www.financedigest.com/the-four-benefits-of-digital-transformation-in-the-finance-industry.html "The Four Benefits of Digital Transformation in the Finance Industry") include lower costs and improved accountability with the replacement of physical or analogue processes and interaction with digital equivalents to save time. By empowering business units to identify their own digital needs, organisations will be able to maintain agility and competitive advantage. Crucially for CFOs, this also [means the ability to make one thing:](https://www.financedigest.com/the-bank-of-things-bot-has-arrived-but-what-does-it-mean-for-banks-2.html "The Bank of Things (BoT) Has Arrived: But What Does It Mean for Banks?") profit.

**Losing financial control**

While the [role of the CIO is changing with digital transformation](https://www.financedigest.com/the-root-of-all-good-sustainabilitys-role-in-digital-transformation.html "The Root of All Good: Sustainability’s role in Digital Transformation"), a key role of the CFO remains the same: to guard against over-spend. However, with IT budgets [moving towards](https://www.financedigest.com/the-orange-essential-oil-market-to-move-towards-constructive-advancements.html "The Orange Essential Oil Market To Move Towards Constructive Advancements") individual teams, a gap is forming between the knowledge of how much a budget is and what it is being spent on. Gartner [\[2\]](#_ftn2) estimates that “by 2019, annual spending on enterprise software licenses will decrease by 30% as a result of software license optimization.” This is with IT controlling 83 per cent of the spend. Imagine what it will be like when 50 per cent of IT spend rests not with a handful of budget holders, but potentially hundreds.

**Lack of visibility**

With software spend disseminated throughout an organisation, it will become increasingly difficult for IT teams to establish a clear view over what software is deployed where and how many licenses are needed compared to those held.

This loss of visibility will, in turn, increase the likelihood of unexpected and unbudgeted [costs hitting](https://www.financedigest.com/australias-westpac-flags-950-million-profit-hit-led-by-energy-exit-costs.html "Australia’s Westpac flags 0 million profit hit, led by energy exit costs") the financial team, either through unplanned technology acquisitions or financial penalties issued by software and infrastructure providers for over-use of applications and cloud resources.

On the flip side, by empowering IT teams to achieve 100% visibility of all IT consumption across all platforms, the finance and IT teams can collaborate to identify significant cost and efficiency savings which can have a tangible impact on the organisation’s [bottom line](https://www.financedigest.com/how-high-performers-can-increase-a-bottom-line.html "How high performers can increase a bottom line").

Either way, it’s in the CFO’s best interest to find a way to manage the disruption gap now and avoid unnecessary [costs later](https://www.financedigest.com/cost-of-living-crisis-prompts-buy-now-pay-later-warning-from-uks-fca.html "Cost-of-living crisis prompts ‘buy now, pay later’ warning from UK’s FCA").

**Take action today**

Bridging the disruption gap has to be a high priority for IT and finance leaders.  As leading industry analyst firm Gartner [\[3\]](#_ftn3) advises: “the focus of the software asset management discipline needs to shift from compliance to cost containment, as reduced customer bargaining power produces escalating prices at SaaS contract renewal.”

To achieve this visibility, IT teams need specialist [solutions that provide full visibility of software](https://www.financedigest.com/healthcare-software-solutions-to-ride-the-immunohematology-market.html "Healthcare Software Solutions to ride the Immunohematology Market") and hardware assets (both on the network and in the cloud, physical and virtual) and how they are being used. Traditional IT [Asset](https://www.financedigest.com/iot-platform-wells-up-south-africas-silulumanzi-water-utility-power-asset-management-savings-and-monitoring.html "IoT Platform Wells Up South Africa’s Silulumanzi Water Utility Power Asset Management Savings and Monitoring") Management and Systems Management tools will not suffice. These teams need access to the latest breed of inventory and [optimization technologies](https://www.financedigest.com/seenthis-launches-ground-breaking-segment-by-segment-optimization-technology-for-display-advertising.html "SeenThis launches ground-breaking segment-by-segment optimization technology for display advertising") designed for organizations heavily invested in Digital Transformation.

1. Gartner, Metrics and [Planning Assumptions Required to Drive Business Unit IT Strategies](https://www.financedigest.com/tax-planning-strategies.html "Tax Planning Strategies"). Published: 21 April 2016, Kurt Potter, Stewart Buchanan
2. Gartner, [Cut Software Spending](https://www.financedigest.com/uk-maps-out-return-to-higher-foreign-aid-spending-after-covid-cuts.html "UK maps out return to higher foreign aid spending after COVID cuts") Safely With SAM. Published: 16 March 2016 ID: G00301780

Analyst(s): Hank Marquis, Gary Spivak, Victoria Barber

3Gartner, Software Asset Management Reaches a Tipping Point: SaaS Cost Management Eclipses License Compliance,  06 January 2017 ID: G00315121, Stephen White \| Victoria Barber

[\[1\]](#_ftnref1) Gartner, Metrics and Planning Assumptions Required to Drive Business Unit IT Strategies. Published: 21 April 2016, Kurt Potter, Stewart Buchanan

[\[2\]](#_ftnref2) Gartner, Cut Software Spending Safely With SAM. Published: 16 March 2016 ID: G00301780

Analyst(s): Hank Marquis, Gary Spivak, Victoria Barber

[\[3\]](#_ftnref3) Gartner, Software Asset Management Reaches a Tipping Point: SaaS Cost Management Eclipses License Compliance,  06 January 2017 ID: G00315121, Stephen White \| Victoria Barber


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