The modern enterprise of the future will require a hybrid CFO, revealed our survey, 2018 CFO Insights on New Technologies
. The CFO’s role continues to expand. So, future CFOs will need to understand both regulatory and financial complexities, as well as technology, including cloud-enabled ERP and data analytics. How can CFOs acquire this hybrid expertise, from financial, regulatory expertise and operations, to technology, strategy and data analytics?
This shift in the CFO’s role is primarily caused by the advent of the digital transformation in the enterprise, which is key to competitive differentiation. The journey has started and is ongoing for the majority of companies, across all industries. We define digital transformation as the current state that leverages cutting edge technologies to radically transform and disrupt traditional business models and processes, value propositions, interactions with value chain participants and customer relationships.
“So far, investment strategies for digital transformation have been influenced by the desire to improve operational performance and reduce costs. Future investment strategies will zoom in on more strategic opportunities, such as improving customer experience, competitive differentiation, or new products/innovation,” said Srikant Sastry, Grant Thornton’s national managing principal for Advisory. And this is the stage that will feature more and more opportunities for CFOs to contribute to overall firm strategy.
Our survey revealed that CFOs play an important role in digital transformation and that their involvement can only increase in the future. To steer technology investments and support digital transformation, CFOs need to be technically adept today. Already, 21% of CFOs said they own the digital transformation agenda for their enterprise.
Nowadays, CFOs need to worry about cloud solutions, which are here and available, and the adoption of new technologies, which can no longer wait. To maintain their competitive mark, companies need to have a strategy for a pace of adoption in place. CFOs have the opportunity to play a strategic role in this respect.
In the future, CFOs will need to be able to understand technology and use data analytics for decision making even more than today. 89% of respondents said that the future will require CFOs to heavily rely on data analytics in their role. Current CFOs feel this pressure and stated their intention to take steps to improve their expertise today. 75% of surveyed executives said they planned to update their data analytics skills in the next year.
In their role, CFOs should be able to manipulate and, most importantly, interpret all sorts of data in order to make predictions and recommendations that will support their go-to-market strategy. Data analytics brings about the ability to identify with enhanced accuracy profitable markets and customers. CFOs can apply financial data analytics to predict growth and also to use the regulatory environment to their advantage in order to derive competitive differentiation.
In addition, to improving their own skills or hiring talent to answer this skill gap, CFOs can also improve their strategic grasp on digital transformation by establishing a stronger, more seamless collaboration with their technology counterparts. Of our CFO respondents, 74% said they need a more effective partnership with IT leadership, and that makes perfect sense because this collaboration is key for competitive differentiation.
“What we’ve notice in our client work is that companies where the CFO and the CIO are in lockstep have a great growth trajectory, which gives them a competitive advantage. That is because this collaboration enables them both to work on technology decisions that are aligned to business strategy and goals,” said Sastry.
What can enable this collaboration between CFOs and CIOs? Consensus on this collaboration is that it requires good communication and flexibility from both sides. CFOs and CIOs need to find a common language. They each need to be willing and able to interpret their expertise for the other. For example, CFOs can start seeing technology as an enabler for innovation and growth, and not as a constant cost center. CIOs need to translate their highly technical expertise and recommendations for the CFO and also link their request for technology funding to KPIs that prove value through revenue growth, operating margin, asset efficiency, or future market expectations that can fuel company growth.
The bottom line is that the digitization of the enterprise is blurring traditional roles, bringing about not only the need for new technologies, but also the need for new skills sets and mindsets. Collaboration and flexibility become key aspects of success for C-suite roles, along with various expertise. This internal focus then will enhance new technology investment success and ROI, paving the way for a customer journey that not only meets the needs of today’s customer, but also exceeds her expectations tomorrow.
National Managing Principal, Advisory Services
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