The digital economy is everywhere. There is no sector that is not (directly or indirectly) influenced by new technologies. New business models are driven by the Cloud, mobile, Predictive Analytics, Machine Learning, Blockchain and Big Data. Five reasons why CFOs have to reinvent themselves as Digital CFOs to grapple with these developments.
1. Stay informedTechnological developments have an impact on internal business operations and external influences. The CFO is responsible for making sure his or her financial department is functioning optimally, but also for being a strategic partner to the business. Machine learning and predictive analytics will affect the finance department in the future. What is the effect of Blockchain on your company? What do you want to invest in and what technological developments will you ‘miss out on’? If you want to be relevant as a CFO and be able to advise, then you need to understand the operational, economic and technical benefits of these technologies and be able to translate them into relevant business models. No easy task since the world of blockchain or cutting-edge big data is relatively new.
2. IT consultancy roleThe role of the CFO in shaping IT strategy and investments is becoming increasingly important. For almost half of CFOs, IT is a direct report and a quarter of CIOs report directly to the CFO. This means more responsibility. As a CFO you increasingly need to understand where the potential of new IT opportunities lie, so you understand where they can add value in the organisation. After all, you have insight into most major IT expenses and can learn from digital developments which you see ‘inside’ and ‘outside’.
3. The driving force behind innovationMany product-focused innovations are initiated by the CEO of the company. As a strategic partner of the business, it means that you as the CFO are involved in the innovation process. Not only where figures are concerned, but also from a creative standpoint. In addition, there is a misconception that innovation only concerns generating new (product) ideas - something that hasn’t been done before. But nothing could be further from the truth. Innovation can be as simple as eliminating spreadsheets from the budget cycle. Where process innovation is concerned, the Digital CFO can be just as innovative as any other role. It all depends on how you define ‘innovation’.
4. Yesterday’s changers are today’s growersResearch* shows that companies which make a total digital transformation, from customer experience to process automatisation, perform better than their competitors and competing colleagues in almost all aspects (increased turnover, EBITDA). And that doesn’t only apply to new companies who enter a mature market with new business models, such as Coolblue. Traditional companies that have embraced digital technology are also growing; a good example of this is De Bijenkorf.
The Digital CFO knows there is synergy between investing in internal processes and ‘external’ investments, such as housing and customers. Organisations which offer an excellent 'customer experience' see the effects on internal processes. If you as a Digital CFO succeed in identifying the opportunities of digitisation for your company, you can take company performance to a higher level.
5. Build a strategic and digitally savvy TeamAs a CFO it is impossible to have knowledge of every (new) technology that comes along. Make sure you surround yourself with specialists and build a team of digital professionals. Millennials who have the latest skills in big data analysis and who have mastered intelligent ERP will be a welcome addition to the skill set of the classical financial core of the company. In addition, strategic skills are becoming increasingly important in the financial team. As looking back and operational finance become fully automated and business software offers increasingly more tools for better strategy development, there are options for the Digital CFO to make an increasingly large contribution to the value of the company. You can only take on this role if you gather the right people around you.
*SME Barometer 2016, survey among business owners conducted by Exact