CFOs are in a good position to play a key role in driving digital transformation because of their position at the center of the process of strategic planning and financial disciplines.
Over the past ten years, Chief Financial Officers’ (CFOs’) duties and responsibilities have changed dramatically. While the CFO’s primary responsibility in the past frequently revolved around a company’s financial gatekeeping in addition to playing a significant role in guiding an organization’s strategic decision-making, modern CFOs in the digital age are instead finding themselves in positions to make decisions centered on operations and information technology more and more frequently (IT).
The finance function profession is changing as a result of digital technology; it is now more focused on analysis to generate real value than publishing accounting entries and creating dashboards.
The tools and models of choice to address those issues have emerged as document digitization and process automation
1. The Economic View of Digital Transformation
Prior to delving into the CFO’s role in digital transformation, it is important to define this word specifically, especially from the perspective of economics and finance. Digital transformation is fundamentally the application of technology for three primary goals inside an organization:
- Increasing operational effectiveness
- Enhancing business partnerships and financial targeting
- Enhancing productivity and proficiency along the value chain.
2. The CFO as an Innovation Facilitator
The digital transition is mostly driven by innovation. Transformation is difficult without adjusting internal and external organizational function mechanisms to the ever-changing digital ecosystem and the new opportunities as well as challenges it brings. Innovation is obviously not cheap, thus controlling your finances to concentrate on particular areas of inventive growth is a necessity that cannot be disregarded. To do this, organizations need the steady yet fearless guidance of a person who can assist in creating a culture that supports innovation despite the threat of risky investments hanging over them.
Due to their emphasis on the bottom line and cautious approach to organizational growth, CFOs have historically been characterized as being risk-averse. However, as the “master of the coin,” the CFO effectively defines what constitutes “failure” and “success” in the context of the organizational culture. CFOs can effectively accelerate the pace and robustness of digital transformation by taking periodic calculated chances at encouraging various organizational units to “think outside the box” and investing in novel concepts.
3. The CFO as a Crucial Strategist
Controlling the organization’s budget has always been a key responsibility of the CFO. This effectively means that the CFO is in charge of allocating and utilizing resources for particular goals, directly bringing technology issues and business IT strategy under the jurisdiction of this particular role.
A CFO who recognises the value and long-term effects of adopting new technology, whether it takes the form of an ERP system, a cloud-based customer management system, or any other of the countless new instrumental paradigms, is essentially contributing significantly to the strategic growth of the company.
4. A Myth-Buster and Value Creator
The CFO may effectively perform this extremely important position by, among other things, ensuring that the organization’s decisions are well-informed, educated, and financially secure by assiduous research and a thorough comprehension of market dynamics.
There are countless options and chances in the digital world. This could appear to be a good thing, but there are actually quite a few traps that the uninitiated and uninformed will run into while navigating this environment. Organizations who are unable to predict the possible long-term repercussions of holding onto a particular trend might lose big without a trustworthy myth-buster on their side as new technologies emerge and disappear at an unprecedented rate.
Using a CFO’s services extends beyond simple legal requirements and financial jargon. Within the context of digital transformation, a CFO can offer the necessary assistance that a company needs. A CFO is a clear source of opportunity, offering guidance on potential investments that have the potential to dramatically increase productivity and efficiency as well as the ability to find new and unexplored prospects in the area of customer contact and brand development. A potent strategy for preparing for the numerous uncertainties and opportunities that are an indelible part of the modern digital world is to select the proper person or outsource services to a professional firm that can evaluate the role of the CFO for your organization.