Digital Transformation and CFO Fina
FROM CHIEF FINANCIAL OFFICER TO “CHIEF FUTURE OFFICER
As a CFO you hold a top financial position in an organisation. Traditionally you are seen as the custodian of an organisation’s financial health, making critical investment decisions, and ensuring a healthy bottom line. You are critical in balancing short-term financial performance with long-term value creation.
Some CFOs have moved beyond traditional financial oversight and have embrace a broader strategic role. Yet, their role is evolving in sync with the digital transformation wave. Their role now sits at the centre of the strategic-planning process and financial discipline, making them well positioned to become critical drivers of digital transformation.
Early digital transformation projects were often treated like science projects that tested the efficacy and possibilities of new technologies, but increasingly, with core functions that centre on the strategic planning process, the CFO has become a catalyst of digital transformation.
A recent Sage research report highlights just how central digital is for today’s CFO. Nine out of ten South African CFOs today play a role in their organisation’s digital strategy with 15% being fully responsible for digital transformation. Where they do not take the lead, CFOs are key partners with the other members of the C-suite.
The CFO is both a digital finance and transformation leader. The role of the CFO in digital finance is multifaceted, it involves identifying opportunities to digitize financial processes and implementing digital tools and technologies to improve efficiency and accuracy.
CFO also plays a critical role in shaping the organisation’s digital transformation strategy, evaluating technology investments, supporting customer experience initiatives and managing risk. Most importantly, they act as a strategic partner to the CEO by providing real-time, data-driven insights in support of key decisions.
As part of this new role, CFOs lead automation and digitisation initiatives, act as an evangelist for digitally enabled business models, and directly support business unit strategy and performance. Given their overarching view of the organisation’s operations, they can bridge gaps, ensure alignment and transparency across various departments.
Their unique vantage point allows them to spot the ‘right time’ for transformative initiatives, ensuring alignment with overall business goals. They’re in a perfect position to collaborate with other business functions such as IT, sales, and marketing.
Along with risk and compliance teams, CFOs play a key role in overseeing data, fraud, cybersecurity and data privacy. They need to be keenly aware of how digital technology introduces new risks as well as how they can use it to enable real-time decision-making and build resilience into the business.
WHERE TO START AS THE CFO AND THE TEAM
Initially focusing on your people and processes is a great way to begin a transformation without investing time or effort into highly sophisticated new tools. Experts recommend a new way of looking at operations and strategy, one that focuses on being adaptable and flexible to a dynamic environment that’s constantly evolving.
The first transformational step is to simply automate data flow into reporting dashboards. Not only is finance the linchpin to most – if not all – of those different data streams but is also responsible for telling the story behind those numbers, what they really mean, and identifying any underlying dynamics that leadership should take into consideration. It is said that the finance function should be the home of that intelligence, partnering with the rest of the business to drive better decision-making through data. But it can only do that with targeted investment in automation and enhanced capabilities.
It’s important to have data sources and systems that can generate the clean, relevant, timely datasets that will propel data analysis and, ultimately, your people and decision-making process forward. Further visualisation tools like self-service dashboards make your data efficient, convenient, and digestible, helping you become the data-driven organisation of your dreams.
CFOs AND THE SOFT ELEMENT OF DIGITAL TRANSFORMATION
At its core, transformation is about change – and change is inherently human. Therefore, as a CFO you must also address the cultural transformation that accompanies digital transformation. Your decision-making influence can help shape a culture of adaptability, rapid decision-making, and continuous learning, breaking away from old ways of working.
Experts say, finance should be the strategic hub of the entire enterprise. As a leader of that critical hub, the CFO should be the one putting everything into action to make the transformation wheels turn. Ultimately, alignment between the business and its finance team is the “true north” towards which CFOs must steer their teams and the reason they must advocate for digital transformation initiatives.
PARTING SHOT
Digital transformation powered by an organisation’s people, processes, and technology allows you as the CFO to be far more proactive than reactive, strategising for what’s ahead rather than trying to explain what already occurred.
If you are a CFO who has already embarked on the digital transformation journey, please share your experiences and lessons learned.