The digital economy is pervasive. There isn’t a single industry sector or business that isn’t affected, directly or indirectly, by the impact of digital technologies such as the cloud, mobile, big data and social. But with such profound changes underfoot CFOs can no longer brush digital change and innovation under the carpet. And here are 5 reasons why CFOs must reinvent themselves as digital-CFOs.
Digital technologies are transforming processes on both the ‘inside’ of the organisation, for example, core financial processes like financial reporting, performance management, budgeting, financial management and ERP as well on the ‘outside’ of the organization, for example, in its dealings with customers, the supply chain and other stakeholders. It is noteworthy that the same technologies are driving change internally and externally and it is to the CFO that businesses are turning to evaluate the ROI of these investments – not a trivial task in the uncharted waters of social media marketing or ground-breaking big data initiatives. So if CFOs are to have any credibility or influence they really have to understand the operational, economic and technical benefits of these technologies.
Retaining ‘advisor’ status
With 45% of large-company North American CFOs saying that IT is a direct report and 20% of CIOs (Chief Information Officers) reporting directly to the CFO there is little doubt that the CFOs influence in the setting of IT strategy and investment is growing. But along with this growing influence comes the responsibility to be on top of the subject and the CFO is uniquely placed to help. That’s because the modern CFO has oversight of most major IT spend and can learn from each of these experiences whether it is digital on the ‘outside’ or ‘inside’. From this vantage point the d-CFO can be a business catalyst, encourage best practice and ensure that key digital skills are retained and redeployed to where they are needed.
Take the organization to new heights
Contemporary research shows that digitally-infused businesses outperform their peers on almost all measures (revenue growth, EBITDA). And it’s not just new businesses with novel business models swathed in digital technology (e.g. Uber, PinInterest, AirBNB) but traditional businesses, in mature sectors that have embraced digital technology in the ‘right’ way, for example, Burberry the luxury retailer.
d-CFOs know that there is a synergy between investing on the inside AND the outside. If organizations can join the dots, for example, produce an excellent ‘customer experience’ on the outside that is also reflected in right first time processing of transactions on the inside then they are surely onto a winner. d-CFOs can use digital skills to truly lift organizations to exceptional performance.
Role model for innovation
Innovation is a powerful driver of growth yet there are two popular misconceptions. Firstly, there is the suggestion that CFOs are “left-brained” by nature i.e. predominantly logical, sequential and analytical rather than “right-brained”, that is, intuitive, visual and creative. The second is that innovation has to be a novel idea – something that hasn’t been attempted before. But nothing could be further from the truth. Innovation can be as simple as eliminating spreadsheets from the budgeting cycle or improving process visibility in ‘quote to cash’ cycle by deploying to the cloud. But when it comes to leading process transformation d-CFOs can be as innovative as anybody else. It’s a matter of recalibrating what we call innovation.
The CFO’s understanding of the balance sheet and what drives value, together with his or her growing influence in strategy setting and technology decisions, makes the CFO an ideal business partner and agent of change.
CFOs that have this 360 degree view of technology enablement and processes will be uniquely placed to help the whole of the ‘C’ suite rationalize and make tough investment decisions, whether this relates to the CMO’s (Chief Marketing Officer’s) request to fund a new customer App, the CIO’s request to underwrite a Big Data initiative or the finance function’s need to resolve the most appropriate technology approach for absorbing an acquisition. d-CFOs will be in demand.