CFOs have to accept that, like it or not, the digital “genie” has been let out of the bottle and there’s no putting it back.
The role of the CFO has been evolving over the past couple of decades. In the beginning, the pace of that evolution may have seemed manageable, with minimal disruption. But technology is now changing so quickly, CFOs can no longer maintain a “wait-and-see” attitude. Not acting quickly to move towards a digital presence can seriously challenge an enterprise’s competitive advantage.
A recently released Ernst & Young (EY) study, The DNA of the CFO, addressed the four forces that are disrupting today’s CFOs and other finance leaders. The first of these disrupting forces is digital. In their report, based on a survey of more than 750 finance leaders throughout the globe, Ernst & Young found that 58% felt they need to “build their understanding of digital, smart technologies and sophisticated data analytics in order to deliver against their critical strategic priorities.”
Ultimately, strategic priorities are generally about growth, profitability and productivity. Automation and digitization put companies in a position to address and enhance all three of these priorities. When respondents were asked what their number one objective is over the next five years when it comes to digital technology, the largest percentage, 34%, listed driving growth; 25% said orchestrating organizational transformation; and 23% listed driving cost efficiency.
The study notes that one of the main drivers in technology has been the growth in robotics process automation for back office functions. In numerous blogs, we’ve shown how implementation of automated financial process solutions can increase efficiency, reduce costs, provide visibility, and enhance buyer/seller relationships. Eliminating paper and manual processes and implementing automation creates a transaction continuum that breaks down the silos between functions. This promotes collaboration between procurement and accounts payable; it opens up the lines of communications between two functions that are responsible for major expenditures and cash flow within the organization; and it creates an atmosphere where strategic thinking is encouraged.
But just accepting that a digital focus is needed isn’t enough when it comes to CFO responsibility. CFOs are often the glue that holds all of the other functions together. They’re the ones that see the company’s “big picture;” that understand the main priorities and objectives. So it’s up to the CFO to make an honest assessment as to where the company currently is on the digital scale as compared to where it needs to be. That involves not only technology, but also key personnel and other resource capabilities. Only when understanding that can CFOs help direct investments in the areas that will provide the greatest advantage and opportunity. EY also pointed out another key area where CFOs can help mitigate digital disruption is in preparing their enterprise for whatever disruptions might occur along with the ways they can be handled.
What’s abundantly clear is that this expanding CFO role is evolving along with technology. Part finance leader, part mediator, part digital cheerleader; the CFO continues to wear many hats and all of those roles need to focus on making disruption as non-disruptive as possible.