IT budgets remain heavily weighted towards maintaining legacy systems, even as enterprises push to fund AI initiatives. For Michael Perica, Chief Financial Officer at Rimini Street, this creates a practical constraint: Organisations are being asked to invest in new capabilities while still absorbing the cost and disruption of forced upgrades.
In a conversation with Frontier Enterprise, Perica pointed to end-of-support timelines, growing mindshare tied up in legacy environments, and increased scrutiny of SaaS models as factors shaping how finance leaders allocate capital. He also outlined how finance leaders can work with CIOs and CTOs to operationalise strategy and prioritise technology investments.
How should CFOs approach technology spending priorities?
What I would encourage is for folks to think about how they move away from the model where 90% of the budget goes to keeping the lights on and only 10% to innovation.
There’s been discussion around a so-called SaaSpocalypse. If platforms like Claude introduce plugins that target enterprise workflows, it raises the question: Do organisations still need to follow established market pricing? Modernisation has often meant moving to the next SaaS application, staying within SaaS, or going to SaaS. The market is now signalling that this is not necessarily a given, as organisations should not assume they will continue down the “keeping the lights on” path.
This is where it becomes necessary to look at things differently. The reason for this shift is that agentic AI offers a different way of approaching customisation and modernisation on existing systems. It provides a quicker and more economical path to modernisation, while using technology to support better business outcomes.
Why do large enterprises struggle to shift spending from legacy systems?
That universal concern is why systems integrators are reaching out, saying they have clients asking: “How do we get to AI? How do we run projects on the AI side?” Everyone is looking at AI, and if you have an IT budget of a reasonable size, how do you capitalise on it?
We can keep these large, core transaction systems running for many more years, which frees up both budget and time. It also gives enterprises more control over how they innovate outside of these systems, rather than committing further innovation to vendors’ roadmaps and pricing.
We’re having these conversations and seeing the frustration from organisations that are asking: “Wait a minute, we’re upgrading siloed systems and then spending in parallel to layer AI on top and make it all work?” It’s difficult to find a P&L that can support all of that. You still have a business to run, and you’re not making these purchases for their own sake. This is where the discussion shifts to giving enterprises more options in how they approach these decisions.
What signs show that an organisation’s core systems are holding back innovation?
The main issue we’re seeing is the need for forced upgrades. It’s no secret that end-of-support timelines for large SAP systems in 2027 and 2030 are driving analysis, decision-making, and capital allocation, requiring organisations to prioritise or materially account for these changes. This involves not just financial investment, but also significant mindshare, and internal and external activity that is diverted away from innovation and towards implementing new systems because they are required to do so. It is disruptive for organisations.
And it’s not just SAP. With VMware and what’s happening in that space, we’re seeing organisations look for alternative paths. For over two decades, we’ve taken this approach, and we’re now applying it to newer technologies such as agentic AI, where systems can be built, customised, or supported through partners. The focus is on stabilising existing systems, making them work together, and giving organisations an alternative path.
How should finance leaders evaluate AI investments?
Sitting in this role, we talk about ROI and total cost of ownership. I tend to focus on total cost of ownership, as it’s easier and more applicable to track. With ROI, we’ve all seen models that rely on subjective parameters, which can make it possible to justify a positive outcome.
For AI investments and their ability to extract value, I would look at the highest level: start with the strategic direction, which every CFO is aware of and which is set by the board and shareholders. There is a strategic direction, and there is a plan. The next step is operationalising that plan.
I have been advising peers in roundtables and discussions that one of the most important partnerships for a financial professional is with the CIO. It is important to share the strategic plan with the CIO and discuss how to operationalise it.
From there, prioritise areas where there are pain points or business disruption, and determine what works best for the organisation, including what technology is available, ideally technologies that can work alongside or outside existing systems to support better business outcomes.
This is where it becomes necessary to think differently about operationalising strategy using these technologies, particularly outside the continued upgrade path of siloed systems that are often perceived as modernisation. This is also why we are seeing the market question the valuations of SaaS stocks. I see the market’s telling us something, and I suggest: Please listen to the market.
What role should the CFO play in shaping technology strategy with CIOs and CTOs?
I would suggest going deeper and having that level of sharing. That means letting them in to understand the strategy and the operational elements, and giving them visibility into unit economics. Do we build our own systems? Do we modify existing systems? Do we purchase something externally? And how do we put together an architecture to reach the desired end state, rather than thinking within existing constraints?
The CFO shouldn’t become a technologist, and the CIO doesn’t need to take on responsibility for how unit economics are captured and analysed. However, involving the IT group in discussions around the business model and how it is evolving is critical. Likewise, understanding the stress points and operational needs of IT, and involving the finance organisation in those discussions, are critical as well.
I have not come across a transformation project that does not involve a technology component. Business transformation, at its core, involves IT systems. Operationalising strategy and optimising these systems requires an understanding of each step, and this is where the CFO, CIO, and CTO need to share discussions and analysis across functions.
