The CFO Role in Digital Transformation: Leader of the Pack
What Is Finance Transformation? Building the Modern Finance Organization
Finance isn’t what it used to be, and that’s a good thing. While it’s always been indispensable to a financially sound enterprise, leadership now looks to finance for its unique perspective and skill set for strategy and development as well. In other words, finance helps drive a wide range of decision making, providing a sense of direction and fuel for an organization’s growth.
As we’re about to discuss, enterprises that best harness the pure power of business information and intelligence give themselves an inherent competitive advantage in today’s data-driven, technology-pushing world. And, like it or not, the revolution waits for no one, so there’s no time like the present to get the finance transformational ball rolling. Thankfully, Embark’s just the team of specialists to show you how.
Finance Transformation at a Glance
More a significant overhaul than a complete reinvention, finance is building on its traditional roots to combine governance-oriented responsibilities like accounting, budgeting, and auditing, with tasks devoted to strategic thinking and planning. It’s a more involved role for finance, one that uses automation, advanced analytics, demand planning, pricing, customer and employee satisfaction, and other dynamic facets of operations to give leadership more precise and far-reaching insights.
Naturally, this new perspective isn’t random or without a specific purpose or origin. The marketplace itself is driving this transformation, now requiring a sense of agility and adaptability to meet the needs of an exceedingly complex and ever-changing environment. From the rapid flow of business ventures moving in and out of the market, to the accompanying mergers and acquisitions continually changes the landscape – both internally and externally – finance is growing up right before our eyes.
The CFO’s Role in Transformation
This rapid evolution is making finance a central figure in an enterprise’s strategic initiatives, leveraging an enhanced and expanded finance function to meet those goals and vision. As leaders of the transformation, CFOs are quickly becoming consiglieres of sorts to the CEO, advising on all strategic matters thanks to their unique and specific perch within an organization.
From that lofty position, finance leaders can concentrate on creating new value, utilizing people, processes, and technology to drive innovation in thought and practice, developing cost efficiencies and streamlining operations along the way. Budget and forecast cycles become slimmer and more accurate as financial planning and analysis (FP&A) builds new muscle. Simultaneously, performance management becomes more effective, attrition and overhead fall, and that ever-critical agility increases. Sounds pretty great, right?
Sure, technology is under an especially bright spotlight in a transformation, obviously playing a significant part in finance’s continuing evolution. However, tech is still just a single piece of the bigger transformational puzzle. So, while the technological front is absolutely critical, the office of the CFO must also focus on other common hurdles while transforming the finance function.
This way, by including change management considerations and building out a pervasive data culture, leadership is creating a foundation that can serve the enterprise in perpetuity. And that’s a tough one to beat.
Going Beyond Costs
We’re not saying costs aren’t important, of course, because they’re obviously critical to every enterprise. However, a balanced approach that places adequate attention on value creation rather than a strict emphasis on costs can create sustainable growth that doesn’t sacrifice long-term stability for short-term profits. A transformed finance function shifts that focus from one specifically targeting costs and cutting overhead to improvement and growth which, over time, will naturally lower costs.
Also, from an employee satisfaction perspective, finance’s evolving role within an enterprise means new, highly efficient finance processes that leverage technology can effectively handle what were once arduous and repetitive tasks for staff. Even better, those employees are now free to innovate and collaborate since they’re no longer mindlessly shuffling numbers between spreadsheets. This creates a more fulfilling work experience that ultimately means they’re happier, more productive, and less likely to leave the firm.
The same notion holds true for customer satisfaction. Those highly efficient processes that can now automate and streamline internal tasks give your employees the opportunity to better focus on the customer experience. This is especially important for your customer-facing staff, where a sense of empathy goes a long way in maintaining brand loyalty and spreading a positive word-of-mouth around your enterprise.
Such improvements in employee and customer satisfaction are much more difficult, perhaps even impossible, to accomplish without an expanded finance function that streamlines your operations and draws out the very best from your team. Happy employees lead to happy customers, pure and simple.
The Only Constant Is Change
Paradoxically, the fast and unrelenting nature of innovation itself can sometimes be a roadblock to transforming finance, at least without taking proper precautions. From an enterprise’s perspective, it can be difficult to continuously stay aware of new technologies, making it essential for every organization to designate personnel that stays on top of the innovations or, preferably, partner with specialists that find and implement the right solutions for their specific needs.
Likewise, an enterprise must also look for ways to streamline their processes, always searching for areas of improvement that technology can address. Granted, not every company has the means to devote people, time, and resources to such efforts but, once again, that’s what makes relationships with partners like Embark so vital.
Whether in-house or through an experienced partner, however, it’s in every enterprise’s best interest to maintain a current understanding of advancements in the marketplace and how those innovations might drive new efficiencies and create new value.
Best Practices to Boost Your Transformation Goals
We understand high-level advice only goes so far in highlighting the importance of a transformed finance function in today’s enterprises. Therefore, we also have a handful of best practices to help your finance team get up and running on the transformation front and give you a solid foundation to build from in the future.
Business leaders and decision-makers need a good understanding of what their employees are actually doing, not what they’re supposed to be doing. That’s where activity analysis comes into play, a way for leadership to track how long it takes employees to accomplish tasks. Whether through software, surveys, or daily tracking polls, management gauges that time and compares it to a benchmark or performance standards. The gap between the two represents a potential area of inefficiency and a critical driver for transformation.
Establish Goals and Build a Roadmap
Would you start a road trip without a destination in mind? Probably not. You can say the same for most, if not all, aspects of your operations. The goal and destination is your ideal future state, what your enterprise strives to become. That said, our advice is to build a roadmap to get you to that ideal, whether you’re a transformation noob or all of this is already second nature.
To begin, compare your current state with that ideal future state, and begin to assemble a business strategy to get you from point A to point B. This might include new technology, partnerships, staff training & development, a change of processes, or a combination of things to help you reach your vision.
Start Small and Grow
While we absolutely love it when enterprises come to us with big visions and even bigger dreams, it’s usually best to start with the low-hanging fruit. Put another way, if you’re new to financial transformation, don’t start your initiative by implementing an expensive, sophisticated new ERP.
Instead, begin with baby steps. Identify the most obvious sources of inefficiency in your organization – maybe a slow financial close, redundant spreadsheet consolidation, or simple process automation – put together a finance strategy to address it, and then put your plan into action.
In other words, get some wins under your belt and grow from them, letting those smaller wins generate critical buy-in and evolve into an enterprise-wide process that, with time, consistency, and relentlessness, will redefine your organization, internal business processes, and how you compete in a crowded marketplace.
A Word for CFOs
Look, we understand what it’s like to be in a CFO’s shoes, being pulled in countless different directions at once. As the old saying goes, however, there are only so many hours in a day and, as we’re sure most CFOs will attest, the responsibilities weighing on your plate only seem to get heavier by the minute.
But that endless list of responsibilities and tasks is precisely why a successful finance transformation project shines like a supernova, getting the most from accounting and finance teams while driving business value through greater productivity and efficiency. And while it’s easy to stumble on semantics and concepts at first, the root of it all is as straightforward as the transformation already taking place in your everyday life
Automation – and Beyond
Let’s take a look at the typical day of a CFO, only from a more personal perspective. A smartphone’s alarm wakes them up in the morning, also allowing them to check their email and schedule before they even get out of bed. A streaming app then plays the day’s financial report while they’re in the shower, making sure they know what’s happening in the markets and world before they’re even dressed. From there, they either use a ride sharing service or an AI-driven traffic app to negotiate their way to the office.
During the workday, they might order lunch through another app, book a hotel for an upcoming vacation, and remotely adjust the temperature of their house before leaving the office and heading home. Once back at their house, a streaming service’s algorithm helps choose a new show to binge watch based on their viewing preferences and, as their head hits the pillow that night, their virtual assistant turns off the lights through smart electrical outlets.
To an outsider, all of that finance technology would seem complex and cumbersome – perhaps even to that typical CFO – as they introduce each new innovation into their life. However, once they understood the premise and utility of those different tools, each one quickly became second nature, the learning curve suddenly seeming a heck of a lot less daunting. The end result is a transformed life that is now efficient, streamlined, and well-attuned to their individual habits and demands through specific, well-placed technology.
The same premise holds true for a CFO and the finance organization they oversee. Real-time metrics reports automatically populate on a tablet’s data dashboard, push notifications from a cloud-based cash management platform appear on a smart watch, algorithms create a spectrum of forecasts based on different variables culled from big data and daily finance operations – they’re all part of a transformed finance function for this modern, digital, automated age.
Best of all, the technology a CFO needs to create those efficiencies, both for their own job performance as well as the enterprise itself, are already available, just waiting for Mr. or Ms. CFO to integrate them into their operations. Therefore, the role of the CFO is changing quickly and drastically as people, processes, and technology transform the landscape. And while the transformation train hasn’t completely left the station yet, there’s no time left to spare.
Long story short – the actions CFOs take now – as in today, this second – will determine who the winners and also-rans are. And we want you to be in that former category.
The Finance Function’s Bigger Picture
But Rome wasn’t built in a day. For now, take this primer on a transformed finance function and use it to examine your enterprise from a bigger picture and perspective. Are you getting the most from your talent? Are your employees and customers satisfied with your organization? Or are there obvious areas for improvement?
Remember, profitability doesn’t exclusively stem from cut costs. It comes from revenue growth as well, and that growth stems from added value within your organization. The bottom line – give Embark a holler and let us show you what a transformed finance function looks like. Remember, finance is growing up. Or at least should be. So use this opportunity to find out what it’s capable of accomplishing for your operations, employee base, customers, and stakeholders. We promise you won’t be sorry.