It’s become readily apparent that digital transformation is presenting itself across every industry, in every way, shape, and form at a breakneck pace.
As we all are probably aware of by now, digital transformation is all about the use of new(er) technologies, business practices and creating new mindsets that are being put in place to drive significant business change. Emerging technologies such as artificial intelligence (AI), Robotic Process Automation (RPA), Machine Learning, and the Internet of Things (IoT) are literally “transforming” how we all work – setting the stage for process improvements that will minimize costs while maximizing productivity and efficiency.
Just to level set the playing field on the impact of digital transformation, IDC has recently forecast that global spending on digital transformation will reach $6.8 trillion globally by 2023. Thus, most companies are no longer struggling with if they should embrace digital transformation, they are now focused on the where, the when, the how, and of course, the how much!
At the center of this surge resides the CFO. Today’s CFO is faced with the dual task of not only transforming their own finance department but also in taking a leadership role in helping to determine data and technology strategies that will drive growth and operating velocity across the entire organization. The reality is that the modern CFO can no longer be just a one-trick pony. They are now expected to serve as key advisors with their eyes on the prize of the organization’s core business objectives.
Today’s progressive C-suite and their respective board now expect their CFOs to provide real-time, data-enabled decision-making support. In addition, they are now expected to interpret varied data streams to build business cases and enhance growth and investment outcomes, all while delivering intelligent forecasting and budgeting.
And in a business climate that is increasingly and exponentially growing with robust financial reporting capabilities and comprehensive finance analytics software solutions, it has become progressively evident that quality data and analytics can lead to business insights that are ultimately and inextricably tied to a) emerging technologies and b) significant operational growth.
More and more though, forward-thinking CFOs are now taking the lead in pushing digital transformation to the top of corporate spending agendas. This is not by mistake. In fact, according to Accenture, CFOs are generally the first to measure the benefits of digital initiatives, as well as the often greater-than-expected returns on investment. So much so that Accenture refers to this type of CFO as a “digital apostle” for their organizations.
CTOs may be the critical architects of transformation, yet some could argue that it is the CFO that is quickly becoming the discerning investor in internal digital initiatives that aim to propel organizations beyond their antiquated and perhaps obsolescent aspirations. Having said that, how is the desire to be ahead of the proverbial transformational curve affecting CFOs and finance departments? Let’s look.
Perhaps the most important agenda item of today’s CFO is how to seamlessly integrate digital transformation initiatives into their own department. Prior to the pandemic, historically low unemployment rates had CFOs struggling to hire skilled professionals. Post pandemic, it has only gotten worse. Thus, the digital transformation mandate now isn’t much different than it was before the pandemic-and that is to:
- Maximize the capabilities of the assembled talent.
- Build the type of finance department that’s agile enough to play a critical role in supporting strategic decision-making.
- Automate as many non-value-added and repetitive tasks as possible.
- Refocus finance teams on more important strategic work.
By carrying out these tasks, the data and analytics insights that these innovations and changes will generate, can instantly provide and enable human employees the ability to make optimal, high-value, business decisions.
Taking this a step further, it has become pretty evident that digital tools are more efficient and less error-prone than human workers – and ultimately, they don’t need to rest-they can go non-stop. Not only do they enhance productivity by completing tedious, manual tasks faster, they drastically reduce mistakes and rework. As an example, Accenture has noted that when their clients use RPA effectively, they have seen average handling times reduced by up to 40 percent and processing costs that could be up to 80 percent lower.
Let’s face it, topflight CFOs need to be astute, proactive business partners. With the continued evolution of finance and accounting software and tools arming them with powerful new insights for boosting financial performance. Getting to and staying at the top can be more attainable. With access to better, real-time data, the CFO and their finance teams can more easily spot patterns and trends, gain better insights, offer timely analysis to key decision-makers, and adapt faster to changes in the marketplace.
As an example, AI tools might instantly identify and evaluate the effects of unexpected events like a pandemic or supply chain disruptions that indicate a likelihood of nonpayment or fraud. Machine learning and AI algorithms also create predictive models that help CFOs minimize risk and achieve higher returns from investments and capital market financing.
Digital tools can improve the speed and accuracy of financial plans and forecasts as well. Automated on-demand budgeting tools and software, as well as planning, and forecasting capabilities provide the agility finance teams need to adjust to the short shelf life of plans and forecasts in today’s fast-paced business environment.
Previously, Finance Departments consumed with transactional tasks, struggled to keep up with the constant fluctuations that result from macro-economic or geopolitical volatility on the world stage like a pandemic. By adopting cutting edge, digital tools, changes from tax policy to foreign currency valuations for example, can be quickly and easily modeled, revising assumptions, and offering instant feedback that can help businesses revise their strategies.
Digital Transformation initiatives often stem from a desire to boost profits, become more competitive, cut costs, and improve process efficiencies. In fact, more than 62 percent of CFOs say implementing new technologies has improved the efficiency and effectiveness of their business, according to a CFO magazine report.
Thanks to the previous 18 months, progressive CFOs are now beginning to take a broader view of technology investments, such as digging deeper to increase the value of intangibles like customer satisfaction for example. Unfortunately, according to a recent survey by Workday, nearly half of the CFOs they surveyed, have not completed any digital transformation initiatives. But there was a reason. The research was conducted during the pandemic and thus many companies were forced to rapidly shift to remote work. The upside though is that 34 percent expect to prioritize it in one year—during recovery from the pandemic.
Adopting this big-picture approach requires CFOs to forge a deeper understanding of emerging smart technologies and data analytics so they can grasp its benefit for high-value, strategic purposes.
There’s no doubt that Digital Transformation is a key to propelling a business forward in today’s ultra-competitive environment. There’s also little argument that emerging technologies can enable CFOs to take full advantage of their team’s talents and skills and solidify their spot as an integral member of the management team. The real key? Post pandemic, progressive, CFOs who can be the driving force for ensuring that digital initiatives are a top tier priority on the growth agenda.