CFO: Digital growth and the connection with financial growth
The CFO in the finance function at any multinational today will consider digital growth to be an important company priority. Their reasoning behind this may be around the concept that digital technology is best placed to fast-track company growth and expansion.
New digital technologies can influence go to market strategies while significantly boosting a multinational organization’s capacity to be agile and responsive. CFOs will be keenly aware of the dangers of being left behind in an unforgiving market -consumer expectations around digital capabilities have skyrocketed and due to the prevalence of digital transformation in their personal lives, there is now a strong expectation around digital excellence when it comes to the products they consume and interact with.
In the past, digital growth may have been solely about innovation or simply keeping pace with market change and consumer expectations. But increasingly, there is data available to suggest that in the long term, digital growth and transformation can lead to sustainable financial growth.
In this article, we will take a look at the connection between financial growth and digital growth and examine what some of the long-term objectives a CFO might have in relation to digital technologies at their organization.
Digital transformation is not about creating a short-term increase in revenue streams -it is about putting in place foundations for better productivity and innovation across an organization.
Revenue and financial growth will happen as a natural byproduct of digital transformation – any organization that works with tools that help them deliver services or optimized internal processes inside specific departments will naturally be a more productive, efficient and organized. End users of products or consumers tend to benefit from this in the long term.
When the focus is on digital growth and innovation as a cultural mindset – then projects around digital transformation take hold across an organization with enthusiastic buy-in from key stakeholders. It’s almost a mission -a way of thinking and behaving, with an end goal that involves surprising and delighting customers and users. When you approach business models this way, you have every chance of succeeding in the market and growing financially.
The link to financial performance
The link between digital transformation and superior financial performance exists because digital growth can result in a broad range of benefits across multiple different departments- and the combined efficiencies of these departments which are now operating with new digital technologies can be seen to have an overall positive impact on financial performance.
Digital technologies can save time and money in departments such as global payroll and human resources. When business functions such as these use digital innovation for process improvement, there can be a quick impact on productivity and bottom-line expenses, and this always helps improve profit figures at an organization.
Digital transformation often involves doing more with less -processes get optimized and subsequently, costs get reduced. Finance leaders will always be interested in these metrics which effect the bottom line and help with financial planning and forecasting.
Digital transformation can also support the introduction of new products into the market at a faster rate than before. Digital technologies can reinvigorate and even fast track projects that were previously taking a long time. If you can get your products to market quicker than the competition, then bottom line revenue growth is likely to follow as consumers tend to act quickly and decisively. For example, a significant upgrade to a mobile app which enables customers to clearly understand who you are and what you have to offer, can result in a whole new revenue stream. A little bit of innovation and a strong desire to prioritize the customer experience can transform the relationships that consumers have with a product and result in impressive financial returns.
Digitally skilled employees
Employees with strong digital skills are the ideal fit for organizations that are focusing on digital growth. These employees come to the table with a digital mindset already installed -they use digital products in their personal lives and have a natural skill set when it comes to quickly learning about the latest digital developments in the market.
A chief financial officer will be interested in further leveraging the skill sets of these people while also looking hard about ways to reskill or upskill members of the workforce who could benefit from becoming more digitally savvy.
Upskilling tends to also result in greater employee engagement, and this can only have positive benefits for the end consumers of products, which in turn results in positive benefits on bottom line profits, cash flow and business performance
Digital transformation projects which form a part of an organization’s commitment to overall digital strategy also tend to result in more innovative thinking. Simply put, digital transformation becomes a mindset. It could create a landscape that is conducive to original thinking and innovative products- thinking digitally almost has a domino effect -and sooner or later, somebody comes up with a fantastic idea for a new product or a way of innovating an existing product.
It is also the case that investing in digital growth and prioritizing it across the organization brings into existence a scenario where something that was previously not possible to achieve, is now attainable because the digital tools exist to make it happen. This is perhaps the biggest validation of digital transformation projects and the reason why so many investment cases for digital transformation deserve the green light.
Digitizing for financial growth
Part of the role of a CFO, along with finance executives, will be to look at a number of areas within the organization that could benefit from digital improvements. The return on investment might not always be immediate but the focus should be on the justification for the digitization. Below are some key areas where a level of digital advancement can be introduced with a view to long term financial growth:
CFOs who choose to green light digital transformation projects and continuously advocate their use have a very good chance of seeing long-term financial gains. This is because digital transformation projects can result in better quality products that consumers are more willing to buy while also leading to an engaged workforce who feel they are operating with the kind of tools they need to meet customer expectations in the marketplace.
Digital transformations also have the advantage of introducing new technologies that are customizable and adaptable by nature. Cloud based digital platforms exist in the here and now but by their nature, are also capable a future proofing of business because they are resilient and adaptable. This is why CFOs will continue to view digital transformation projects as opportunities for the right mix of stability, innovation and continued growth.
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