“Digital transformation” may seem like just another buzzword, but where it differs from other commonly used boardroom lingo is that it is more than a catchphrase. There is real value to all businesses in responding to digital disruption, and that is why it has risen to the top of the corporate agenda.
The C-Suite are increasingly looking to an ostensibly surprising source to take the lead in determining data and technology strategies: the CFO. More than just a number cruncher, the CFO of your organization is increasingly seen as the CEO’s strong right arm.
Looking beyond the numbers
The modern CFO has long outgrown their previous administrative function. The finance department is an integral stakeholder with their finger on the pulse of core business objectives. CFOs are now expected to handle diverse business data to build business cases, affect growth and investment and aid decision-making, as well as intelligent forecasting and budgeting.
In a new report released by management consulting firm McKinsey, CFOs reported that the number of functions reporting to them has increased from 4 to more than 6 in the two years since the last McKinsey survey.
With the role of the CFO moving ever up the value chain, a CFO’s KPIs are increasingly linked to actualizing company strategy. This strategic role would be impossible without taking on a leadership role when it comes to addressing the key boardroom agendas: big data and artificial intelligence (AI) are at the top.
The McKinsey survey revealed that CFOs were the second most commonly identified job title after CEO as being responsible for initiating a transformation, and more than half of all respondents said their CFO has been actively involved in developing transformation strategy.
Accenture’s research confirms that of McKinsey, showing that 8 in 10 CFOs are leading digital transformation across their organizations. In their report, they refer to CFOs as the ‘new digital apostles’.
A CFO’s take on
In an interview published in The Wall Street Journal, Coupa Software CFO Todd Ford defined the need for digital transformation as being about “getting the right data to the right people at the right time.”
Ford continued: “Digital transformation is about preparing your organization to not only become data-driven but to use data to drive incremental value. That requires automation and a move to cloud-based architectures, of course, but there is much more to it than that. True digital transformation takes place when organizations use machine learning and artificial intelligence to mine that data for insights that improve processes and create value.”
Transformation isn’t all smooth sailing
The McKinsey report demonstrated that more than 60% of CFOs said 25% or less of their department’s work has been digitized or automated in the last year, and the overall adoption of technology is low across their organization.
A survey published in 2017 by Wipro Digital revealed that half of all companies surveyed believed they were not going to achieve their digital transformation objectives. Two leading barriers to meeting these targets were identified as mindset and skills challenges.
A changing role requires an updated skillset
An Ernst & Young (EY) report from December last year confirmed the research from other management consultancy firms and identified that the role of CFO has undergone a metamorphosis. The report about the DNA of the CFO identified that future CFOs will be coming from multidisciplinary backgrounds and that there is a current need for upskilling. Top of the list, according to the EY report, was an understanding of digital, smart technologies and sophisticated data analytics.
The EY report listed the CFO’s ultimate priority as “upgrading IT and financial data analytics tools to professionalize finance management.” As a result, 87% of CFOs intended to increase investment in corporate reporting technologies.
A true business transformation is occurring
With Todd Ford’s useful summation that a business’ priority is “getting the right data to the right people at the right time”, it is a little wonder that the benefits of a Procure-to-Pay software solution are high on the CFO agenda.
To keep updated on procurement management news, features and best practice guidelines for the procurement industry, sign up to our newsletter.
Image: By Geralt on Pixabay