IDC says enterprises worldwide will pour $1.18 trillion into digital transformation-related efforts in 2019. Much of this budget will go into driving business models, products and services, and organizations.
While much of the attention on digital transformation is centred around enhancing the customer experience the reality is that many of an organisation’s internal function must be re-designed to reflect this customer-centric focus.
The finance function whilst historically an inward-focused function is not spared from the need to transform. Like all other functions within the organization, finance is under pressure to adapt to the changing business environment.
This is not to say that finance’s traditional roles have been assigned elsewhere. Finance is still responsible for all things related to monies.
New responsibilities, new expectations
But new responsibilities and expectations are being heaped on finance professionals, including the head honcho of the department – the Chief Finance Officer.
One such expectation is agile – able to adapt to changes, be willing to adopt new ideas, and be adept at all things finance. For the CFO, the additional expectations go beyond business-as-usual.
Yes, the CFO is still steward and protector of financial integrity.
But to say that the preoccupation of finance is entirely about cost control is to belittle the office of the CFO. Yes, the CFO is charged with overseeing that the company meets is tax and regulatory obligations. He or she has oversight on matters related to governance, risk and compliance. He is charged with providing strategy for the best use of the company’s capital.
Jaelle Ang, founder and CEO of The Great Room, refers to these as table stakes when it comes to the CFO role.
The Great Room
Now, however, he or she is expected to drive operational performance and efficiency, and actively take part in internal and external strategies.
Challenges ahead
A global survey by McKinsey revealed that CFOs recognize the new requirements of the role but are challenged by the limited time, resources and available skills and experience to make the transition to a fully digital finance operation.
Rishi Mehra, financial controller Asia-Pacific at AON, believes that finance cannot be untouched by digital. “As the business model changes, CFO have to think of how those digital models impact finance. Finance has to partner with the business and has to be at the forefront of adopting these digital changes,” he added.
The modern finance function is being asked to be much more agile. While the role of the CFO has always been to be steward and protector of financial integrity, it is evolving to include driving operational performance and efficiency, and actively engaging in internal and external strategy.
As finance function evolves to take a larger role as the champions of organization’s financial and strategic objectives, the finance team needs to focus on fully understanding what it takes to execute the plan and ensure a level of consistency and transparency.
More recently, the CFO is also expected to provide strategy around funding and shareholder value. The Great Room’s Ang summed up the expectations of this role during an interview with FutureCFO.
“It is very important would for the CFO to manage the various stakeholders in in our business. It's also being very proactive to make sure that we are meeting their needs, that we have the right debt and capital structure so that we are always well positioned to take advantage of the next opportunity,” she added.
The CFO role is no longer a backroom function. “It is about driving that confidence to attract the capital, and put that capital to best use in a very public facing rule,” concluded Ang.
Where to start
At a recently concluded FutureCFO roundtable on digital transformation, several senior finance managers acknowledged the new direction of leadership – to transform the business through technology. One CFO pointed asked pointedly: where to start?
Aon’s Mehra suggests that to move forward, CFOs is to develop a use case – a very short and very snappy use case that demonstrates the value of the innovation being sought.
“It is not a PowerPoint that will sell an innovation idea to the general management. It is a very specific use case, a proof-of-concept, that presented well can very quickly lead into a project that will get funding, and so get the innovation going. People want to see action, not PowerPoint presentations,” concluded Mehra.
