The Chief Financial Officer’s Role in a Digitally Transforming World
CFOs are facing challenges that include expanding markets, growing sales, improving margins and reducing costs. More and more often these challenges are being addressed through the lens of digital transformation. Gartner defines digital transformation as “the process of exploiting digital technologies and supporting capabilities to create a robust new digital business model.” 1
How are you positioned to lead digital transformation at your company?
To provide perspective to this question here are two brief summaries on the topic from leading experts.
Krishnan Ramanujam, President, Business and Technology Services, at Tata Consultancy Services lists the following phrases to describe the CFO’s role in digital transformation; “astute investors in internal digital initiatives “, “value-minded evaluator”, “mindful proponent”, “rigorous catalyst”, “scrutinizing supporter” and “discerning champion”.
Ramanujam’s research revealed four key opportunities where the CFO’s role in digital transformation can stand out:
1. Determining the economic viability of digital business models
2. Sparking profitable cross-functional digital process innovation
3. Helping the CIO determine the IT function’s operating model in a cloud world
4. Accelerating the finance function’s shift from low-value manual work to extreme automation and analytics-rich internal financial advisers.
Do you and your staff have the skills, tools and other resources required to fill all four roles?2
Sandy Cockrell III, Global CFO Program Leader at Deloitte LLP explains why the CFO role is critical to digital transformation this way:
“Creating a data-centric organization that works from one source of the truth requires a holistic understanding of the organization’s data needs and output from a strategic and operational standpoint. With finance central to information flows that touch not only finance but also marketing, sales, R&D, and pricing, CFOs have the broadest visibility into their organization’s data infrastructures.”
Cockrell highlights the following range of experiences that already define the CFO’s role and are required for a successful digital transformation journey:
1. Understanding the challenges of data governance and visibility
2. Aligning budgets with strategies
3. Telling the story to the company’s stakeholders, including, the Board, Investors, Employees, Customers and Vendors.
Do you and your staff have the skills, tools and other relationships required to fill these roles?3
A final note from Cockrell about digital transformation experience and how it could impact your career.
When recruiting a new CFO, CEOs might consider what experience in leading a major transformation the candidate can bring to the table. CFOs who are fluent in digital technologies and have experience leading transformational initiatives are increasingly sought after by boards and CEOs. Successfully overseeing an ERP implementation, and even more so a digital expansion, can be an important indicator that a CFO candidate can lead in these times of digital disruption.
To augment your digital transformation journey read this series, For Chief Financial Officers: A Practical Approach to Using Artificial Intelligence, and use the accompanying tools, AI in Finance - Identification Worksheet, available to you at CFO.University.
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1 https://www.gartner.com/it-glossary/digital-business-transformation/
2 https://www.cfo.com/technology/2019/02/the-cfos-crucial-role-in-digital-transformation/
3 https://chiefexecutive.net/why-ceos-should-put-cfos-at-the-helm-of-digital-transformation/
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