By Scott Olmsted
Our lives have been dramatically changed by technology, so why wouldn’t our businesses also be transformed? Companies that ignore technology, rather than embrace it, could quickly find themselves outpaced by competitors, regardless of industry.
A growing number of businesses are catching on to this phenomenon. According to the “2016 CFO Outlook” from the Bank of America Merrill Lynch, a majority of middle-market companies will spend up to 10 percent of their entire budget on technology. This includes investing in product and service innovation, as well as in core technologies to increase productivity across all departments.
A majority of CFOs surveyed for the “2016 CFO Outlook” plan to increase their budget for technology to help their company achieve stronger fraud protection, expanded market share and increased sales. Currently, plans for technology investments are spread across four key areas among mid-market companies: big data and analytics, cloud computing, e-commerce and digital payment.
Approximately a third of CFOs surveyed said they plan to invest in data management—either for a personal productivity device, such as a mobile phone, tablet or laptop, or an industrial device, such as a bar-code scanner. And having more connected devices results in more data. Having the ability to analyze and use this data strategically is becoming increasingly valuable for companies, as they seek to better understand their customers’ needs and spending habits.
Planning to Invest in the Cloud and E-Commerce
According to our survey, 23 percent of CFOs reported plans to invest in cloud computing this year to gain the greater processing power that is essential to store, track and analyze increasing volumes of data. Cloud software and storage services also allow companies to scale quickly, which can minimize infrastructure cost and upkeep, making them attractive to growing mid-market companies.
In addition, 20 percent of CFOs said they planned to invest in e-commerce technology. As customer expectations continue to rise, retailers are investing in new technologies to attract customers, engage them online and streamline the buying process. Consumers are becoming increasingly cross-border, looking for seamless ways of getting the products and solutions they need to make their daily lives easier.
CFOs are also beginning to invest in digital payment systems, which is a rapidly growing segment of the tech industry that includes payment through mobile devices, chip technology and digital wallets. Digital payments provide a number of benefits, from increased security to a more streamlined buying process.
Middle-market companies need to be aware that technologies are changing quickly, as more options become readily available. Sixty-one percent of the CFOs surveyed listed investing in technological advances as their number-one strategic activity over the coming year.
In the next 12 months, we’ll see CFOs working more closely with IT leaders to determine where to invest for the greatest productivity—both now and in the future. Those investments could range from artificial intelligence to virtual reality.
The speed of disruption requires companies to put new technologies to work quickly, making IT investments a top priority on every CFO’s agenda.
Scott Olmsted is the head of the Technology, Media & Entertainment Group, Global Commercial Banking at the Bank of America Merrill Lynch.