The future of finance will be created by an amalgamation of smart, skilled people with intelligent and efficient technology. The CFO will have to collaborate with multiple stakeholders, including the CEO and the CIO, to push transformation across the enterprise.
As digital transformation leaves no sphere of the industry untouched, leadership roles need to be re-evaluated for the new world. One such role is that of the CFO. As per a report by EY, 69% leaders see the role of finance changing as traditional tasks get automated or managed in shared service centres.
Given their unique position at the intersection of finance, technology and strategy, a CFO can serve as the pioneer for driving disruptive changes in a company. Considering that CFOs hold the reigns to a company’s investment strategy, it is highly important for them to understand digital transformation and evolve as transformation champions.
Let’s take a closer look and how the role of CFO needs to evolve to adapt to the nuances of a modern business.
Technology: No more a capital expense, rather an operational one
The bottom line is always a focal point for the CFO. Moreover, there’s always a tug of war between where to spend and where to save. Traditionally, CFOs used to account technology investments as capital expenditure to be able to take the advantage of amortization and depreciation as years pass. However, considering the way technology is being used and integrated today (PaaS/ SaaS), it makes more sense to treat technology as an operating expense.
Considering the dynamic changes and the speed of digital disruption, when IT spending is accounted for as OpEx, it allows a company to pay only for the capacity it needs and scale up as required. Moreover, this also speeds up the budgeting process as the transformation becomes more affordable and spaced out. And, hence, instead of digital transformation being a big lumpy outlay for firms, CFOs can help break down the expenses, restructure financial accounting and speak with the service provider to understand how the digital transformation investments could be aligned with the firm’s budgets.
Embracing innovation to uncover new opportunities
Modern CFOs must not only maintain their firm’s current financial standing, but also serve as catalysts for change. Technologies like the IoT, AI and ML are redefining how companies interact with their customers. With customer service being the first priority for businesses, customers now consider lightning-fast service as an essential and not a luxury.
For the CFOs, this means that technology adoption is going to uncover opportunities which could have been in the hindsight so far. This also means that traditional offerings would be transformed and new business models would be discovered, which will directly reflect in the revenue streams. Hence, one of the most important aspects to consider while calculating ROI is the possibility of creating new business models which have potential for economic success. For a CFO, it will be important to reimagine the businesses around the customer and hence lead the transformation of making an enterprise an intelligent one.
Intelligent decision-making based on real time insights
The modern finance function is expected to be much more agile and respond to demands and changes quickly. CFO is not just the gatekeeper of financial integrity, but someone who is actively involved in internal and external strategy. One of the key success indicators for CFOs will hence be the strength of commitment towards using real-time data to make intelligent decisions and to break down silos within the organization.
Since most business activities are routed through finance, an organization’s finance team already has an access to a wealth of business data. This presents a valuable opportunity for CFOs and their teams to gain business insights using the right tools. These insights can go a long way in taking decisions which are not only speedy and well-calculated, but also provide a competitive edge to the enterprise. Soon enough, the finance department could emerge as the analytics hub of the enterprise and rightly so, considering the impact it can have on both the top as well as the bottom lines of the firm.
Investing in technologies at the forefront of transformation
Considering finance leaders will have to place their bets on technologies that will lay the foundation of digital transformation, here are the ones that will lead the change:
The future of finance will be created by an amalgamation of smart, skilled people with intelligent and efficient technology. The CFO will have to collaborate with multiple stakeholders, including the CEO and the CIO, to push transformation across the enterprise. The leap calls for a fundamental shift the way CFOs view technology- as an opportunity for growth and not just an expenditure to be written down in records.