Chief financial officers are being challenged now more than ever to become efficient in processes and drive value. Wading through the myriad of technologies can be daunting.
The time is now, however, to think through how finance tools and technologies can enable a CFO’s vision and drive growth, as 2023 becomes the year of digital transformation for CFOs and continued investments in digital capabilities.
There is also continued pressure for CFOs to be agile and manage disruption while driving value and optimizing cost for customers and shareholders.
CFOs will be challenged to create a path where end-to-end processes are more digitally accessible, focus on anticipating market change, and establish new capabilities, products, and services.
“Some key priorities CFOs have … are reducing any expenses that don’t contribute to growth or profitability, ensuring the company has the resources to execute on its top operational priorities and focusing on liquidity and cleaning up the capital structure,” says Andrew Sternberg, CFO at Honor Technology.
He adds that to start thinking more strategically about the finance function within the organization, CFOs need to predict what the markets are going to value in 18-24 months.
Additionally, to scale and grow the digital agenda, CFOs must champion a finance-led data governance framework, utilize dynamic investing approaches, and leverage prebuilt digital integration frameworks.
CFOs Supporting Workforce Needs
“To activate this strategy, we are seeing finance skills and talent in the marketplace adjusting,” says Sanjay Sehgal, principal, head of markets, advisory, KPMG. “Finance organizations must ensure they are supporting the digital needs of their current workforce.”
He adds they must also bring in workers who have capabilities to address the changing digital landscape and make the entire organization more digitally fluent and capable.
“It’s going to be really important to look at a few things,” he says. “First, data governance and management are fundamental.”
It’s critical for finance to lead the effort in identifying and curating data that is high-quality, accessible, and timely, which will establish a rock-solid enterprise data foundation.
Next, revamping financial planning and analysis, broadening services, and generating powerful forward-looking insights is essential.
Sehgal explains CFOs will need to increase investment in predictive analytics, data and signals, and enterprise performance management as foundational tech solutions and tools.
“When creating end-to-end process and financial strategies, CFOs need to make certain that these tools complement one another to build a cohesive and integrated digital ecosystem that works across the board,” he says.
Sternberg adds says CFOs need consistent, real-time dashboards that track fundamental drivers of the business. “They also need an integrated financial tech stack that integrates ERP, financial planning, expense management, payments processing and payroll,” he says.
Lastly, they need an organizational structure that allows finance to play an active role in strategic and operational decisions across the company, such as major product rollouts, pricing decisions, organizational change, and partnerships.
CFOs as Value Integrator
Marko Horvat, Gartner VP of research, adds CFOs must transition away from optimization and start thinking about transformation.
“Making things faster, more accurate, and with less effort has benefits, but each round of improvement brings diminishing returns,” he says. “CFOs must start thinking about ways to transform the function to build and enhance capabilities, such as advanced data and analytics, in order to truly unlock more value from the finance function.”
Sehgal says CFOs should be asking questions including, how do we create a futuristic vision for finance? Should short-term gains override longer-term benefits? And how do we fund digital transformation with the current pressures?
“CFOs are focused on elevating the role of finance in the organization to be a value integrator across the enterprise, as well as enhancing value through new strategies that not only support development but that also promote innovations for capital allocation,” he explains.
In this regard, CFOs can lead the charge in digital transformation by spearheading how to turn data into actionable insights. “This will lead to CFOs to becoming strategic partners of the business by making strategic directives and decisions,” Sehgal says.
Horvat adds CFOs need to recognize the strengths and weaknesses of tools and deploy them to maximize their effectiveness.
“Spreadsheets, for example, are great tools that provide flexibility for ad hoc analysis, however they lack the structure and robustness needed for advanced planning that a dedicated planning software that plugs into their ERP would provide,” he explains. “CFOs should be looking for tools that best address the needs to advance the organization’s strategy.”
If the organization wants to do more scenario planning, or have more agile decision making, it should select the tools that are the best fit for those tasks, instead of relying on more familiar, but less capable solutions.
“Aligning the technology strategy to the strategy of the organization is one of the best ways to get buy in, by presenting the technology as a component of the overall strategy that the other executives have already bought into,” he says.
CFOs Must Stay Agile (and Automated) in a Volatile Era
“Volatility is here to stay and requires finance organizations to be nimbler,” Sehgal says. “It’s going to take a variety of signal and data sets to develop a data strategy for the future that addresses all of the disparate economic challenges.”
He says CFOs should be able to help their organizations identify the risks coming around the corner, while maintaining their fiduciary duty to invest in capabilities to manage the choppiness. “Those enhancements will help organizations get ahead of their competitors during volatile times,” he notes.
Sternberg explains technology that uses automation across the business is key, and finance is no exception. “As the company continues to scale, processing vendor expenses, partner payments and employee expense management requires more labor without technology,” he says. “However, we are finding that adoption of tools like Coupa integrated into Netsuite limits the need to scale our finance operations.”
Sternberg says he achieves buy-in by showing clear ROI for streamlining his operations, showing future cost reductions, and achieving better terms with his vendors.
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