Technology transformation is happening at the highest level in many multinational corporations around the world. While this is to be expected as digital transformation is not uncommon, it is perhaps less well known that the chief financial officer at many of these organizations is the person driving the innovation and technology transformation.
The office of the CFO and financial operations in general are taking a closer look at how technology innovation can transform process is within their own finance function departments but also drive growth and innovation across the wider organization. They are taking this step because they have an obligation to drive long term value in the organization and assist with the delivery of board mandated strategic organizational goals.
In this article, we will examine how the CFO might drive value through tech transformation and look at the reason why many CFOs today are more focused on technology developments then perhaps they might have been a decade ago.
A broader role
The role of the CFO has changed in the last decade and is currently a bit of a moving target in that it is subject to new changes almost every year. While financial commitments, budgeting and delivery of year end reports remain a critical part of their service delivery, the new reality is that the person in this role is also likely to be tasked with participating in overall organizational change.
Market competition is fierce and revenue generating opportunities are now grasped by those who move the quickest or those with the technology stacks capable of capitalizing on them. Speed, agility, responsiveness and powerful technological capabilities are of major importance in the hugely competitive business landscape of today.
What all of this means is that finance leaders like the CFO can no longer just be the person who delivers accounting calculations, year-end financial reporting and cashflow forecasting. They are now expected to come to the table with advanced technology knowledge and ideas on how innovative technology can be used to transform the finance function in the company along with other relevant departments.
Scale with speed
The CFO is expected to help a company scale with speed and agility - to reach new markets and countries and strengthen an organization's presence and brand value on a global level via new business. Scaling at pace is only possible with a robust and very agile technology stack – one that is flexible and capable of aligning to changing priorities.
Things happen fast so decisions need to be made quickly - but decisions have little value unless a company also has new technologies and qualified personnel to implement those decisions quickly. They also need to be able to analyze the results of those business decisions with detailed and comprehensive real-time reporting.
A powerful, fit for purpose technology stack that is scalable in line with company growth is needed to assist in this process. anything a CFO can do to implement such a technology stack will be an example of the CFO office driving value true technology transformation. Financial support and a strong investment case are an obvious area where they can contribute, but this is also about being an advocate of technology for business transformation.
The CFO is an important voice in the room, and they are expected to collaborate with senior IT professionals and other members of the C-Suite leadership team to ensure the widespread adoption of technology that can digitally transform an organization and enable it to carve out a competitive edge.
Data driven insight
A CFO is by nature a risk-averse individual and none of them wish to make any decisions based on incomplete or inconclusive data. They want the data that drives their decision-making to be up to the minute, factually accurate and insightful. This is another reason why they pursue digital transformation - only innovative cloud-based technology stacks are capable of delivering the kind of detailed and comprehensive reporting and data analytics that is needed to ensure decision-making is informed and as accurate as possible.
Accurate data is needed for a clear picture of where things stand right now, and it is also needed to help future forecasting. CFOs cannot afford for this data to come to them at a slow pace, in fragmented forms or from multiple different, disparate systems. This is the opposite of the agility and responsiveness they are seeking with the technology stacks being deployed not only in their financial operations department, but in the wider organization as a whole.
Architect of business value
The CFO of 2021 has become a person who must become an architect of business value - this means they must either influence the strategic direction of the organization or they must be a highly valued participant in this strategic direction and business performance.
Understandably, this creates a new level of pressure for the office of the CFO. But this is a level of pressure they must embrace because the rewards are simply worth it -they have the opportunity to drive huge business value with their decision making around which technology stacks to support with digital investments.
This is an opportunity for the finance organization to ensure that the financial operations function can shape processes and goals across the wider organization. Their investment expertise and financial authority will play a significant role in this as will their relationship with C-Suite stakeholders, right up to CEO level.
They will look to bring cross-functional departments together regularly and use technology to create important connections between them. One example would be using technology to create better data transfer connections between human resources, financial operations and global payroll. These are separate yet intrinsically linked departments who could benefit from data sharing technology as well as digitally innovative tools that enable the generation of useful data analytics and reporting that covers metrics from all three departments.
Identify risks and opportunities.
This is another way for CFOs to drive value- by leveraging the power of advanced technology. Advanced financial modelling technology stacks are needed to help an organization spot risks and identify opportunities. Powerful financial applications and strong data platforms will be needed to support this level of financial modeling.
A secure, cloud environment will be needed to process the large amounts of data associated with financial modelling but the insights, knowledge, metrics and trending analysis that come out of these financial modeling reports will be worth the time and investment.
The CFO is in the middle of some very data-rich environments like HR and global payroll- leveraging financial technology to maximize knowledge from this data is a great way to identify future opportunities for growth and add business value.
Here, finance teams can leverage technology and align it with individual expertise to identify risks and opportunities and then ensure this information is accounted for and plays a role in high level corporate decision-making.
Whatever approach they choose to take, the CFO of 2021 knows that technology innovation is going to play a major role in the development of not only their department but their organization as a whole. The CFO will therefore continue to be heavily involved in decisions around technology stacks and the deployment of cloud-based solutions and applications as they will be acutely aware of the ability of such technology to transform an organization and drive long term business value.