CFOs can no longer ignore the digital revolution. There isn’t a single market or industry sector that isn’t affected by the ravages of the digital revolution. And with intense competition for the top CFO positions, finance professionals that cannot demonstrate an acceptable grasp of the core technologies that are driving technology-infused business models and process transformation are likely to find themselves side-lined pretty quickly or even out of a job. Which is why I am personally committing a lot of time to educating finance functions.
There is no strict definition of a Digital CFO and to be frank the term isn’t in common usage. So why the fuss?
To be blunt, the problem is that businesses are failing at a rate 30 times faster than they were 30 years ago and most of us can point to companies that have disappeared completely or lost market share to digitally savvy competitors.
There are also some huge myths surrounding the digital revolution, for example, that digital technologies are the sole preserve of small and nimble start-ups or that the real opportunities reside in flashy customer-facing Apps and innovations such as drone-based deliveries that seem to grab all of the headlines. But nothing could be further from the truth.
There is an emerging school of thought that larger corporations are better able to deal with these challenges over their smaller competitors, thanks to their ability to scale process and product innovations quickly using corporate assets that are hard for competitors to duplicate – from integrated global infrastructures and world-class business processes, to strong brands and extensive partner networks. And when it comes to innovation, recent research shows that the bottom line gains from harnessing new technology and re-imagining internal processes are frequently superior to new customer-facing sales initiatives.
So CEOs face a dilemma. Do they invest in internal processes, external processes or something in between? And it is to their CFOs – or more precisely technology-savvy Digital CFOs that they are turning for advice. The CFO’s understanding of the balance sheet and what drives value, together with his or her growing influence in strategy setting and technology decisions, makes the CFO an ideal business partner and agent of change. The CFO’s ability to see the ‘big picture’ is pivotal, because digital enablement is not only about having an innovative and differentiated business model, but also about having the most progressive and agile business processes.
So how do ‘mere’ CFOs turn themselves into shiny Digital CFOs? There are three steps. The first is to acquire a thorough grounding in the core digital technologies (cloud, mobile, Big Data and social), and what is coming down the line. The second step is to understand how these new technologies are changing business models, transforming customer and supplier relationships and opening up opportunities for growth and competitiveness – what I call digital technology ‘on the outside’. The third step is to recognize how these identical technologies can be used ‘on the inside’ to transform core financial processes, such as ‘quote to cash’ or ‘record to report’ to improve collaboration, productivity and performance.
CFOs that have this 360 degree view of technology enablement and processes will be uniquely placed to help the whole of the ‘C’ suite rationalize and make tough investment decisions, whether this relates to the CMO’s (Chief Marketing Officer’s) request to fund a new customer App, the CIO’s (The Chief Information Officer’s) request to underwrite a Big Data initiative or the finance function’s need to resolve the most appropriate technology approach for absorbing an acquisition.
That’s why at FSN-Elite we’re preparing finance teams for the digital age.