The pandemic has accelerated digital transformation. While it is perceived to be a technological shift, the CFOs are right at its epicenter. The CFOs will feel the increasing pressure of allocating funds towards modernizing the application and underlying infrastructure landscape of organizations. On the other hand, they must also re-imagine a finance function that can leverage data analytics, artificial intelligence, and cloud technologies to attain real-time decision insights on capital allocation and expense management across the organization.
Here’s a look at four ways in which a CFOs role will change: –
Finance will become a core enterprise function and not just a back-office: The traditional view of a finance department is one that controls costs and manages budgets across the enterprise. However, with digital transformation, CFOs can now reimagine the traditional financial processes and try to transform them and make them efficient. With concepts like Zero-based budgeting and new-age technology solutions to manage planning, budgeting, and forecasting, CFOs are updated in real-time about the immediate and future needs of the company in terms of capital. They can better prepare for the road ahead and can be prudent about investments that the company would make towards growth as well.
CFOs will play a crucial role in defining the company’s digital-led business models: Traditional companies are facing the heat from digital disruptors. The retail business has experienced what Amazon can do; the music industry has experienced the power of i-tunes by a company that has not even been in the music space. Hence, CFOs of today can’t be the ones that are just prudent with spending. They must also have a keen eye for the disruptions in their industry. They must play a lead role in enabling the organization to transform and adopt digital-first business models to enhance customer acquisition, engagement, experience, and delight. The dilemma for the CFOs here is that they must be a proponent and advocate of this digital transformation while also having to keep a watch on the expenses required for the same activity to succeed.
CFOs will play an active role in strategic departments/ functions: The CFO and his team will come in at a granular decision-making level across each area of business such as finance, marketing, HR, sales, customer engagement etc. This can be a reality now only because of digitalization and automation. The CFO and his team will come in at the analysis of customer and employee related metrics and link it to enhance financial metrics. This includes metrics such as Customer acquisition cost (CAC), revenue per employee etc. The finance team led by the CFO will have members who work with the departments closely to analyze data and operations further and derive insights which can be very useful to make strategic decisions.
CFOs will collaborate with the Internal Centre of Excellence: Finance teams must also enhance and automate redundant and rule-based processes that can accelerate collection of receivables, raising of invoices, and management of payment to vendors, tax payment management etc. The finance team becomes one of the stakeholders for the internal ‘centre of excellence’ teams which are constantly researching and innovating on adoption of new-age technologies to modernize the business. For example: the CFO could approve funds to digitize or modernize processes that can make payroll, vendor payments, cashflow management etc. more efficient. They can also fund projects which enable better and clearer view of the financial position of the organization and enable them to take decisions. The CFO could also be a proponent of self-serve dashboards for finance team and utilize the available modernization funds judiciously to reduce dependency on IT/ development teams to access/ create views of the organization’s financials for well-informed decision making on capital allocation and expense management.
The CFO role will now have to be a tech-savvy one irrespective of the industry they operate in. They must have the intelligence and acumen to connect technology efficiencies to financial processes and organizational digital mandates to ensure a positive modernization exercise and to make the finance department truly ‘future-ready’.