Alexandra DeFelice
Alexandra DeFelice

CFOs to Invest in IT When the Economy Improves

New survey finds two out of five expect to make IT upgrades in their company.

October 19, 2009
by Alexandra DeFelice

Chief Financial Officers (CFOs) will look to bolster their investments in information technology systems as the economy improves, according to a survey by Robert Half Management Resources.

The survey of 1,400 CFOs in U.S. companies with 20 or more employees released in September and conducted over the summer, found that 40 percent of respondents chose new or upgraded IT systems as the area in which they are most likely to invest. In distant second was new products or service lines (18%), followed by new locations or real estate (14%) and mergers or acquisitions (6%). Nineteen percent said they wouldn’t invest in any of the categories.

“While finance executives may remain cautious about making bold new expenditures, they understand that updating their IT systems can help improve risk management, increase operational efficiency and ensure regulatory compliance,” said Paul McDonald, executive director of Robert Half Management Resources. “The survey reinforces the belief we’re hearing from our clients that they’re able to find efficiencies in the IT area by spending a little more money. Systems upgrades are helping their workforce be more productive.”

Although this is the first time Robert Half conducted this survey, what CFOs said backs up another survey conducted in January by Robert Half Technology of 1,400 chief information officers (CIOs)and released in April, in which 70 percent said their companies will invest in IT initiatives in the next 12 months.

Information security — protecting the confidentiality and integrity of client data — continues to remain top-of-mind and a “must-have” for companies of all sizes, McDonald said, citing the earlier survey in which 43 percent of CIOs selected information-security projects among their top initiatives. The AICPA’s 2009 Top Technology Initiatives Survey also recognized information security as the number one concern of CPAs.

Other investments that McDonald said made sense for saving money include:

  • Virtualization —Installing many virtual servers on one physical piece of hardware reduces costs associate with server space, hardware and power.
  • Voice over Internet Protocol (VoIP) —Allow users to make calls over the Internet or other IP systems, could help lower monthly phone bills and allow for better message retrieval.
  • Software as a Service (SaaS) —Rather than purchasing software and installing it on their own computers, companies are opting to subscribe to Web-based applications that are hosted on the vendor’s data center, removing the costs associated with maintenance and support and upfront license costs. “For small and midsize businesses, it’s proven to be very attractive,” McDonald said. “They cite it as a way to invest smart in today’s economy.”
  • System training —Organizations often look at IT spending strictly from the software license, maintenance and implementation costs and fail to look at the training costs associated with individual employees who have to learn a new system and the disruptions caused by the necessary learning time, McDonald said.

Companies must also consider whether external resources need to be brought in to augment the internal employees’ regular duties during that time or to help train them to master the new system. Vendors will typically provide an estimate of necessary training hours, and McDonald stressed the importance of CFOs looking not only at whether they are closing the books on time but whether they are providing enough upfront training for employees to gain an hour or even a day’s worth of productivity instead of trying to figure out the systems on their own.

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Alexandra DeFelice is aJournal of Accountancy senior editor and an AICPA CPA Insider™ columnist. To comment on this story or suggest future technology column ideas, e-mail her or call (212) 596-6122.