Disruption comes fast. One moment, a company is the one to beat. Then next – it’s the one trying to catch up. There’s no way to know when or how this will happen, but companies seeking to be ahead of the curve need to anticipate what’s coming and drive digital transformation through proactive, data-driven strategies.
For chief financial officers, this means taking a strategic approach to creating change in the organization while understanding the specific challenges, opportunities and technologies of digitization.
Here are the six strategic ways CFOs can drive digital transformation in their companies:
1.Define what digital transformation means for me and my company
Without a clear definition of what digital transformation uniquely means for you as a CFO, digital transformation ROI and business impact will likely prove elusive because neither the goal nor the journey has been clearly defined.
The good news is, you are not alone. In a global survey, across various industries, only 7% of executives clearly understood the entirety of digital transformation: which is a reinvention of the entire value chain to provide a holistic digital experience and a reimagined customer value proposition.
What’s more, only 5% of finance leaders understood the real meaning of digital transformation.
For the CFO, digital transformation means going far beyond just creating a new standalone website or mobile app for different financial operations, it means disrupting the value chain by applying new technologies such as cognitive/artificial intelligence in the company’s financial operating system and supporting all departments in adopting those technologies.
2.Own the CFO’s role in digital transformation
Once the CFO recognizes what digital transformation means for their organization and company, he/she will clearly understand the role they’ll play in driving this transformation.
Finance leaders have several roles to play in leading digital transformation:
- As a custodian of shareholder value, they will help monitor and drive progress across the company.
- They will need to embrace transformation faster than any other function.
- Become a thought leader who enables other functions such as marketing, sales, service, manufacturing, and supply chain to transform.
To put it another way—If digital transformation is being embraced and championed by the people who decide how a company’s money should be spent, then it stands a greater chance for successful outcomes.
3.Become a CEO/Board liaison
Finance has historically approached transformation from the standpoint of cost and efficiency. However, for digital transformation, they will need to adopt a ‘service provider’ mindset, meaning flexibility and agility will need to be a priority in order to enable the company’s other departments are able to act quickly and avoid disruption.
This doesn’t necessarily mean spending more, it means spending smarter, by clearly defining digital transformation upfront.
By doing this, finance will become a much better liaison between the CEO/Board and the rest of the company by providing realistic estimates of when digital transformation results should start to appear and what stakeholders should realistically expect from transformation.
4.Embrace financial analytics
The companies and industries finding the greatest success with digital transformation are those that are vision-driven and using analytics to determine what move to make next in digitization.
The CFO needs to be actively involved too, leveraging analytics to help prioritize transformation, monitor performance and launch iterative cycles for improvement.
According to Trasers data, nearly two-thirds of financial and accounting organizations across industries can track KPIs in real time, and finance and accounting organizations across industries are starting to invest heavily in data lakes, predictive analytics and AI.
5.Ensure effectiveness via training
Trasers data confirmed that training on new processes, technologies and communications is the biggest determinant of transformation effectiveness in finance and accounting organizations.
However, less than 30% of finance leaders are investing in training. This is a major red flag. The correlation between quality training and results is unquestionable, especially as it relates to digital transformation.
Without proper training, none of a company’s digital transformation initiatives can take hold.
6.Enable business success
Finally, CFOs need to develop a holistic, comprehensive approach to their departments’ and their companies’ transformations. This means remodeling and reinventing every step of finance ops, including fixed asset management, analysis and reporting, order to cash, quote to order, procure to pay, tax management, treasury, payroll management and record to report.
Digital transformations have the most significant business impact when they are aligned with organizational initiatives, which ensures everyone is aligned.
Therefore, clearly the big “ask” of today’s CFO is to shun “business as usual” in favor of “business as enablement”. Properly enabling a company’s marketers, engineers, researchers, and salespeople in the 21st century means taking on predictive analytics, AI and automation, and applying them on an operational level to create an inside-out transformation that ripples through the entire customer value chain. If finance leaders first define what digital transformation means, understand the role they should play in it, become the liaison for the CEO/Board, embrace financial analytics, ensure effectiveness through training and enable business success, they will be leading their companies’ digital transformation initiatives.
We welcome your feedback and comments on how CFOs drive digital transformation.
Learn More from Trasers - Lead Digital Transformation with Fact-Based Insights
