It is important for CFOs to recognise and understand how the implementation of any new technology impacts the ROI and is fundamental for a sound financial strategy.
As industries adapt to new ways of working, firms have to constantly innovate to stay relevant. Today, the use of technologies such as social, mobile, analytics, cloud and artificial intelligence (AI) have emerged as strategic imperatives for more and more enterprises. Digital transformation is not just another IT project; rather it is a Return on Investment (ROI) driven business project with certain pivotal goals like:
i) To simplify complex operations of a business
ii) To automate and modernise user experience
iii) To empower employees with deeper insights
iv) To monetise enterprise data and
v) To discover new business models
For CFOs, it is important to recognise and understand how the adoption of any new technology impacts the ROI and is fundamental for a sound financial strategy.
Simplifying Complex Operations of a Business
The complexity of business operations increase as a business evolves over time. This includes supporting growing number of users, managing large number of transactions, updating numerous records, and many more. Traditionally, multiple systems get into the landscape of the organisation. Optimising the IT landscape can enable organisations to meet ongoing needs to reduce costs and increase agility. Adopting a ‘cloud-first’ strategy could help take care of a lot of otherwise challenging operations by connecting everything to a single source-of-truth. Moreover, when data from all functions is on cloud, leveraging new technologies including predictive analytics, AI and IoT becomes much easier. It is also important to leverage tools to simplify typical finance functions such as credit management, invoice management, compliance and cash-flow management.
An overall cost reduction achieved by adopting new tools and technologies has a direct impact on the long-term profits of the enterprise.
Modernising and Automating User Interactions
In an era where smartphones are fast replacing traditional systems and app-driven business models are a rage, every user feels entitled to personalised and responsive user experience. Anything too complex, and the user might just not want to interact with the brand any more. These missed opportunities can soon transform into business losses if businesses don’t adapt themselves quickly to make user-experience a priority. While choosing or upgrading the underlying technology for any enterprise, it is important to ensure that the user interface is easy-to-use and intuitive. For example, a product-based firm should ensure consistent and updated pricing information is accessible to the user across different channels; timely updates on product availability and delivery are provided and proper support and problem resolution is offered to the user post product delivery.
Empowering Employees with Deeper Insights
Often employees suffer at the hand of misinformation and delayed availability of crucial data. It is critical for a CFO to ensure that important decision-makers across the organization are able to get access to real-time data and are able to derive real-time insights for spontaneous decision-making. An organization can use such data effectively even for customer acquisition by showcasing relevant content and offers, which are more likely to trigger a purchase. Eliminating the time lag between an event and the notification of all appropriate stakeholders could have a noteworthy financial impact on any organisation. Traditionally siloed systems can benefit a great deal by integration of data and provide a birds’ eye view to everyone involved in formulating the business strategy.
Monetizing Enterprise Data
The importance of Big Data can no longer be taken lightly by any enterprise. However, no matter how much pride an organisation takes in owning or having access to terabytes of data, it will make no business sense unless an organisation knows how to monetise it effectively and ethically. Data monetisation allows enterprises to unlock the full value of any data - from customer information to data about the performance of a product. This begins with a thorough self-examination of where the data is being generated and how it is being used. Almost every business today captures and analyses diverse data streams – transactions, supply chain, operations, products, market dynamics, social sentiments, and customer data that includes their demographic profile, location, preferences, and behaviour. The next step is to separate the wheat from chaff. Once you have identified which data is valuable, you can also identify the potential audience for this. The next step is to pair the data with monetisation opportunity. Some of the most effective data monetisation strategies could be found after brainstorming with the marketing and sales teams. The churned data could be used to channelise sales efforts towards consumers, who are considering buying a particular product, for effective ad placements, for creation of better go-to-market strategies.
Discovering New Business Models
One of the strongest cases for digital transformation is opening up of new revenue streams. Integration of various processes with machine learning automates the routine tasks and shows how the organisation can leverage other revenue-generation opportunities by making some simple tweaks to their existing operations. As an example, several businesses migrate to subscription-based models after deployment of automated ERP solutions as they realise how profitable the same can be as compared to their traditional ways of working. By gaining deeper insights into consumer needs, an organization is able to discover previously non-existent or unknown models for revenue generation.
‘Going digital’ might have a different meaning for almost every enterprise. But fundamentally, for each organisation, the nature of this change is strategic in order to advance and thrive in a dynamic world. To derive maximum benefit, digital must extend beyond websites, mobile apps and should focus on the transformation of an enterprise’s core systems.
While CFOs will have to focus on the costs required to implement the required technological changes, they will also need to keep in mind the missed opportunities which could lead an organisation to anonymity if right changes are not brought in at the right time. Justifying the required investment to decision-makers will require explaining the effort, cost and risk of any level of change that is proposed - from infrastructure modernisation to real-time insight alignment; business process optimisation to data monetisation - all this while keeping in mind that those who lead innovation will lead the world.
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