The Digital Road - Enabling Finance to Stay Ahead of the Curve
They own and manage most of the business information that feeds digital transformation in organisations. In fact, CEOs look up to them to take the lead in such transformations, by providing real-time, data-enabled decision support.
And yet, the ironic question remains...What has kept the CFO and his function a step or two away from the centre of digital action?
Digitisation – The Critical Access to Data Analysis
As the gatekeeper for vital data that enables the forecast of strategies and decisions, the finance team needs to focus on unearthing opportunities inherent in the data mine and extracting business value from it.
This is where digitisation plays a key role. It provides finance the critical access to data. Since you cannot analyse what you cannot access, digitisation becomes the core enabler of advanced analytics. The essential first step for the CFO is therefore, to develop a fact-based understanding of their function's competencies in analytics and digitisation.
Once Finance develops the right digital capabilities to access and analyse data, they will be able to identify financial opportunities, and optimise them to provide maximum business value. This will enable their organisations to understand past performance, predict future scenarios and make smarter decisions. It will also ensure better risk management, strong performance and profitable growth.
Emerging Areas of Digitisation in Finance
A range of technological advances and widespread availability of business data places CFOs and their teams in a vantage position to spearhead transformation. Especially in the areas of sales, procurement, fulfilment, supply chains, and business performance.
Automation and robotics pave the way for greater process efficiencies. A recent Mckinsey research showed that 42 percent of finance activities can be fully automated and another 19 percent can be mostly automated. Advanced analytics enable acceleration of decision support and finding growth opportunities. When combined with data visualisation, they provide end users access to real-time financial information in a self-serve approach that further reduces their costs of reporting.
And when the right algorithm-based tools and platforms are thrown in, the result, is even greater organisational outperformance.
Moving Towards a Digital Finance Organisation
Based on their organisation’s strategies, needs, capabilities, current technology strengths and skills, CFOs can champion the right investments. Digital transformation is not an instant result, and comes with its fair share of challenges. Competing priorities in resources and budgetary allocation, lack of familiarity with digital tools and technologies, along with difficulty in integrating various processes and operations are some of these challenges.
Yet, the CFO should guard against using them as easy excuses to maintain the status quo. Piloting projects that systematically move away from isolated legacy systems to digitise critical tasks is the way to go.
“Get ahead, or get left behind,” is a clear message for the finance function. The time to get on the digital highway is now. It calls for a culture change through the finance organisation, starting from the CFO’s commitment and sponsorship.
Investments in people, processes, and systems are critical — in terms of technology upgrades, skilling and reskilling of the finance team. CFOs need to move away from mere benchmarking of past performance to identify, assess and analyse business value drivers. Only then can their function architect future-ready and future-proof success.