2021-09-23-Gartner-The_CFO_s_Guide_to_Funding_the_Enterprise_s_Digital_Investments_17页_376kb

The CFO's Guide to Funding Enterprise Digital Investments

This report is part of a three-part series focused on helping CFOs set and execute digital strategies. Traditional project-based funding models are inadequate for digital initiatives due to their iterative and uncertain nature, leading to underfunding and slow resource reallocation. The study recommends adopting a product-based funding model that aligns funding with business outcomes rather than specific projects.

Key Findings

• Less than 25% of organizations have adjusted their funding processes to support digital investments.
• Product-based funding provides flexibility and ensures strategic resource allocation to prioritize business outcomes.
• 84% of organizations plan to adopt product funding models over the next few years.

Recommendations for CFOs

CFOs should:

1. Set funding targets for digital priorities and establish product categories based on strategic goals.
2. Adjust business case reviews to accommodate uncertainty in digital initiatives.
3. Adapt scorecards and metrics to include leading indicators beyond financial measures.
4. Transition incrementally to product-based funding by starting with key initiatives.

Why Product-Based Funding?

• Addresses digital transformation’s agility and interconnected nature.
• Facilitates flexibility for opex-heavy cloud and SaaS investments.

Case Example: Autodesk

Autodesk uses fixed and flexible funds to maintain stability while reallocating resources strategically.

Four lessons for transitioning to product-based funding were derived from successful implementations by Brocade, Johnson & Johnson, and TD Bank.

Conclusion

CFOs must reassess their funding models to enable digital transformation, leveraging product-based funding for greater agility and alignment with business outcomes. Starting small and demonstrating value incrementally builds stakeholder buy-in.

Actionable Next Steps

• Pilot product funding for high-priority initiatives.
• Refine business cases and metrics to reflect digital uncertainty.
• Leverage case examples (Autodesk, Brocade, etc.) to model successful transitions.

CFOs should align digital funding with evolving business strategies to support digital optimization and transformation effectively.