Over the years, the role of the CFO has transformed from “head bean counter” responsible for accounting and reporting past activities and transactions to report on what happened in the past. Now, modern CFOs are asked to focus more on taking the information of what happened in the past to shape the narrative for the future of the company.
Corporate boards expect CFOs to be more analytical, strategic, and have broader insights about the future of the organization. To accomplish this, CFOs need tools such as business software systems that can help them connect to data sources across the organization and generate reports with actionable insights and the ability to drill down into key performance indicators.
The CFO’s Need for Digital Transformation
The CFO role can be split into three buckets:
- Developing and defining the overall strategy
- Execution to ensure business decisions are grounded in sound financial criteria
- Enablement, leading key initiatives that support overall strategic goals
Doing so requires the right tools to represent the organization’s progress, provide insight and analysis to executives, and execute the strategy set by leadership. Many are achieving this through the use of digital transformation and new business software systems.
Digital transformation involves using technology and data to remake processes. This doesn’t mean simply converting them into digital versions, but rather improving or revolutionizing them. IDC reports that companies can expect significant benefits such as productivity improvements, new and expanded revenue streams, cost efficiencies, and process improvement from implementing digital transformation.
Unfortunately, CFOs can be inhibited from digital transformation by the innovator’s dilemma: unwillingness to innovate because it may interrupt or threaten key revenue streams.
The COVID pandemic has changed this. Either the CEO has initiated a digital transformation agenda that cannot be ignored, or competitors are forcing a digitalization of the business. The impact this has on CFOs will change the tools and business software systems they use, pressure them to fund IT projects, and perhaps change the business model.
Because of their role and influence within the organization, CFOs should be leading the digital transformation project. Depending on skills or competency, this can be done either solo or in conjunction with the CTO.
Why CFOs Need a Voice in Technology Decisions
The responsibilities of a CFO cover several areas from financial information and reporting, and Ernst and Young noted that two of the four forces reshaping the role of the CFO include digital and data. Considering these factors, CFOs ought to be playing a major role in business software system and technology decisions.
The CFO should embrace technological innovations that improve effectiveness, increase efficiency, and enhance insight. New technologies—such as cloud computing, analytics, artificial intelligence, and process automation—offer an opportunity to reimagine how the business should look. To better benefit from new business software systems, CFOs will also need to manage the risks in each technological innovation.
Many CFOs also have CIOs reporting to them, which means the oversight that the CFO has over IT should embrace two levels: strategic governance for long-term IT initiatives, and individual projects.
- Strategic governance includes issues such as determining IT priorities, how current applications support business processes, how efficiently IT is being used, and expenditure and ROI of major projects. This is the traditional steering role of CFOs, but focusing only on this level means that CFOs may miss the chance to provide valuable input on day-to-day decisions.
- The second level, individual projects, involves CFOs helping to lead design and requirements decisions and being the key decision-maker in some areas. Of course, this may require spending a lot more time on a project. Getting too involved, though, can make the CFO a decision-making bottleneck, so this has to be managed carefully.
Business Software Systems to Manage the Enterprise
The right enterprise software offers opportunities for organizations to transform existing products and introduce new business and delivery models. The data that enterprise software can deliver enables CFOs to have the management information and analytics that are critical for them to perform their function properly, navigate the business in the future, and provide what the board needs.
Companies have increasingly implemented business software systems such as enterprise resource planning (ERP) to achieve greater process effectiveness and efficiency and have the availability and use of information to make decisions. An ERP application is the foundation of a business’ operations. For a CFO, the right ERP gives the capability to:
- Track and report on all business transactions
- Have visibility over all key aspects of the business
- Analyze information in real-time
- Ensure governance and compliance
- Increasingly make use of artificial intelligence to enhance oversight and decision making
Why CFOs Should Guide Technology Decisions
CFOs can help companies successfully deliver on the full potential of their business software system investments. Without the CFO’s leadership, certain key elements of a software project may run into problems: benchmarks of performance may be confused, managers may focus on more visible projects rather than those of high value, and expected benefits may not make it to the bottom line.
Choosing the right business software system can seem daunting. Looking for a place to start? Visit PositiveVision’s library of free downloadable business management software whitepapers to guide you in your search for inventory management systems, manufacturing systems, accounting systems, and more.
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