What Role Does The CFO Play In Digital Transformation?
While technology teams are often found reporting to the CFO, that role may not be the first one that comes to mind when you’re discussing digital business transformation. There may be a perception that CFOs are the ones requiring justification for expenses instead of the leaders who are dreaming the big dreams required to fundamentally remake the business. Today’s CFOs are stretching in new directions as their role evolves to be a more visible part of process growth, technology and visioning for the future. With the massive investments that are required to implement new technology solutions, a critical success factor for these projects is to have the full buy-in of finance — and the layer of accountability for results that comes as part and parcel of a CFOs tight involvement in these initiatives.
Businesses Are Spending $6 Trillion on Digital Transformation
That’s right — trillions of dollars are being leveraged to drive digital initiatives from artificial intelligence to IoT (Internet of Things) and augmented reality. The costs of hardware and storage may be negligible, but the never-ending changes to software platforms drive a significant portion of the costs associated with major change. This puts technology leaders in a tenuous position in terms of justifying the spend because these are sunk costs from the perspective of the CFO. Deriving ongoing value from an asset can be challenging when it’s likely to be deprecated in only a few years and has negligible resale value.
Data is a Vital Strategic Asset — and a Risk
The capture and storage of customer data is no longer the realm of marketing folk, as technology leaders and finance professionals alike are scratching their heads in an attempt to keep up with morphing regulations and cybersecurity challenges. Consolidation information into centralized databases is more crucial than ever before due to the shifting climate around privacy regulations in the U.S. and abroad. Leveraging this data to drive advanced personalization can become the competitive advantage that businesses need, but it doesn’t come cheap — or quickly. CFOs are a needed point person between financial activities, the data flowing throughout the organization and are also able to keep their fingers on the pulse of the operational needs of the organization.
Providing Operational Support for Key Digital Initiatives
CFOs can help step in on projects that are floundering and push teams to define core deliverables and stick to the solutions that have the greatest promise for the future. As the head of finance, it’s imperative that CFOs have a handle on where and how data is stored or the organization risks excessive fines and public exposure in the event of a cyber attack or even loss of data access due to a disaster event. In this new and expanding role, CFOs are best able to align the strategic initiatives of the organization with the funding required to drive them forward.
CFOs Taking the Lead in Digital Business
According to McKinsey, CFOs are increasingly pushed to the forefront of digital finance initiatives but are often still struggling to find how they can effectively work with other executives to drive transformative activities. Digitization in finance is a growing trend and one that is being actively embraced by leadership and staff members alike due to the added efficiencies that can be realized with solid technology implementations. Unfortunately, it’s just as easy to have a miss as a home run when it comes to digital finance operations — requiring a strong partnership between technology leaders and financial executives to determine where the priorities should lie for business transformation.
Whether or not they are leading digital transformation within the business, CFOs are feeling the disruption that is rippling throughout the organization with the introduction of new technologies and business requirements. “Digital technology is disrupting the role of the CFO. It is fundamentally changing the way organizations approach finances and how they interact with customers,” explained David Axson, managing director at Accenture Strategy. With all of the focus on digital transformation of the business, CFOs will have more than their share of challenges over the next decade.