Lee Thong Tan (pictured), CFO Practice Lead, Asia at Workday shares with FutureCFO audiences why cloud is important for finance post-pandemic.
Future CFO: Some surveys indicate that companies expedite their digital transformation during the current pandemic while the finance function is interested in tech like RPA and e-invoicing. So why should CFOs adopt cloud post-pandemic?
Lee Thong Tan (LT): The pandemic has brought about the global shift to a work-from-home environment since the start of 2020. We see many companies trying their best to operate under the extreme conditions as they are forced to work remotely. What comes to our attention is the need for greater agility.
What agility means here is how companies can respond to changes rapidly and ensure seamless communication as the external environment becomes more unpredictable and complex. Companies who are able to ensure business continuity will be able to thrive even during a crisis.
It is obvious that the pandemic has forced companies to utilise digital technology to sustain their businesses. Our recent “Digital Agility Index” report found that 88% of organisations in ASEAN and 87% in Hong Kong have used digital technologies to execute their business continuity plans during COVID-19.
Interestingly, our report found that organisations that responded fastest to the pandemic are more likely than all others to have embraced agility by embedding things such as data accessibility and cross-functional collaboration. With an online HR and finance system, critical processes, such as procurement and sick leave can easily be managed online to achieve cost-effective outcomes.
While it’s not clear when the pandemic will end, it is more important for companies to plan for their future. As COVID-19 redefines workplace, finance leaders play a key role in leading the company to transform their business model by taking it online to adapt into the “new normal”.
FutureCFO: What are the concerns of CFOs when it comes to cloud adoption?
LT: While we see an increase of cloud adoption among organisations, there are various factors hindering CFOs to begin their journey to cloud. Based on my conversations with clients, one of their concerns is around the inability to customise their processes for their “unique” business model and cybersecurity. With cyber attacks being more sophisticated, especially with the shift to remote working this year, CFOs play a vital role in ensuring security within their organisations.
We also noticed that many employees within the organisation lack sufficient digital skills when implementing technology tools onto the company system.
In Workday’s recent “Digital Agility Index” report, we found that “a shortfall of digital skills” has proven to be a significant barrier for ASEAN and Hong Kong organisations in faring better with digital agility amid COVID-19. The lack of digital expertise may be due to a prevailing mindset within organisations of not viewing talent as a source of competitive advantage and therefore not investing in finding and nurturing it. 79% of ASEAN organisations do not see talent as an important strategic asset and lack the proper tools and processes to manage it.
Also, some senior leaders are wary of creating decentralised silos of data and business processes. However, they need to know that they are creating efficiencies, not barriers. Combining, maintaining, and evolving a seamlessly integrated portfolio of applications, data, and business processes augmented with analytics and machine learning is what companies need to achieve the agility required across all their business operations to compete in today’s rapidly changing business environment.
It's important for CFOs to adopt a collaborative approach by engaging their planning with IT staff to ensure a smooth cloud move.
FutureCFO: How should CFOs plan for cloud adoption?
LT: With an uncertain future, CFOs need to be able to pivot quickly and constant communication on planning ahead with all business functions is critical. That said, it’s important for companies to ensure their businesses are integrated on cloud. With this in mind, CFOs should start building business agility.
We observe that more and more organisations are replacing antiquated, on-premise applications with SaaS-based cloud applications.
For CFOs who just started their early stage of planning for cloud adoption, it’s important for them to list their goals (KPIs) and work towards them with the right digital tools. Equally important for CFOs is their adoption of a collaborative approach by engaging their planning with IT staff to ensure a smooth cloud move.
The role of the CFO and financial planning leaders is shifting to better support companies for the future.
Having the tools and technology for data-driven decision making enables companies to plan, pivot, and build strategic technology partnerships that support business continuity, growth, and ongoing changes in the industry.
Ultimately there needs to be a mindset shift across the entire organisation, which means companies should adopt best practice processes instead of the old habit of customising the system to suit their requirements. This will help streamline their operations and allow better integration with other best-of-breed cloud solution, and thereby improving agility.
FutureCFO: Business partnering: How should CFOs work with CIO/CTO in terms of cloud adoption?
LT: From a historical point of view, the roles of CFOs and CIOs are independent and static. Now, they are more collaborative.
At the basic level the CFO-CIO collaboration means that finance and IT organisations coming together to support the strategic objectives of the company, so a strong relationship between the CFO and the CIO will build the foundation for companies to innovate and to grow. This is particularly important in a world that’s changing as fast as it is today.
We see this relationship continuously evolve. However, we also found that significant challenges threaten to undermine this critical relationship. In our research “Finance Disrupted”, 68% of finance and IT leaders said that effective collaboration between CIOs and CFOs is limited by the fact that IT and finance don’t speak the same language, there are often terminology and jargon specific to each function domain.
Establishing effective communication between the two leaders and their teams could include inviting finance team members to collaborate on an IT project, or vice-versa. This can help increase understanding of each other’s fields.
The CFO and CIO can also establish common ground together by identifying strategic areas and projects for collaboration. This would include identifying the technology investments that are required to support the organisation’s growth strategy.
Organisations that responded fastest to the pandemic are more likely than all others to have embraced agility by embedding things such as data accessibility and cross-functional collaboration
FutureCFO: What are the best practices in terms of cloud adoption for CFOs?
LT: For CFOs and their teams, navigating an uncertain future requires up-to-the-minute, data-driven forecasting that can be done monthly, weekly, or even daily.
With the global pandemic sending waves of disruption throughout every aspect of an operation, businesses need a real-time view into their cash flow to make the right decisions in the moment. In the digital era, success in business operation is highly reliant on the collaboration between CFO and CIO.
According to our report “Mastering Digital Transformation for the CFOs and CIOs” co-published with Futurum, CFOs must begin to focus on Enterprise Resource Planning (ERP).
ERP is the integrated management of all core business practices – finance, HR and business planning with the help of AI and machine learning. The right ERP system, deployed throughout the enterprise, means that access to data is not restricted or siloed. Real-time information at the fingertips of the teams who need it is available to help guide day-to-day operations, streamline processes, and provide the most accurate data points to drive strategic decisions.
There are a few key points that CFOs should bear in mind upon their decision of a cloud provider:
- Rapid deployment and faster time to value are key.
- On time, on budget need to be vendor promises you can rely on
- The right ERP systems are more cost-effective and faster to deploy than legacy applications
- Security is and should be top-of-mind for identifying the right partner
- Working with technology partners who are thinking about tomorrow