Whereas the CFO of yesteryear was mainly responsible for administrative and financial organisation, technological development and the need for digitisation are now causing the scope of this primary task to expand.
A study by US consulting firm FTI Consulting examining 150 CFOs showed that, nowadays, 90% of them have an important role in supporting operational performance management, technology strategy, and talent development.
The role of the CFO within an organisation’s digital transformation is very important, and should not be underestimated.
Why this matters today?
Digitation often progresses more quickly for CFO departments than for other organisational components. Reasons abound: from the increased amount of data available to the replacement of Excel spreadsheets with data warehouse systems. This experience is what makes the CFO the ideal person to shape the digital transformation.
The CFO’s main goal for the digital transformation is profit maximisation. Increased insight into costs and the customer journey are of crucial importance in this respect. Through the correct manner of digitisation, the CFO should be provided with ‘powers of prediction’ – known as ‘predictive analysis’. In this way, the CFO plays an important role in saving on the costs of the sales process and in improving its effectiveness. The relationship between IT, predictive analysis and the CFO became evident during the situation surrounding Coronavirus – it became apparent that the digital transformation was an urgent process, as properly digitised companies performed better during the crisis. These companies were more flexible, and better equipped to capitalise on the changing situation. This made long-distance working easier for them, for example, but also allowed them to adjust their business model to the new situation more quickly. If any cutbacks were needed, they were implemented based on the insights afforded by the digitisation.
The reasons behind the CFO’s importance for the digital transformation
- •The CFO is the link to the rest of the organisation. The CFO is involved with more and more projects, and is the source of reliable forecasting within SME businesses. CFOs can provide the rest of the organisation with information and data relevant to their departments. This linking process makes the CFO the linking pin between the various departments.
- •The CFO is the risk management expert. Risk management has always been an essential aspect of the CFO’s role. Consider managing turnover risks, cost risks, or other financial risks. This role is now being changed, expanded, and emphasised through IT, as there is more and more data available.
- •The CFO often consider cost-saving the main reason for starting the digital transformation. Research shows that over half of CFOs consider cost saving to be the main reason for starting the digital transformation. By trade, CFOs are concerned with budgeting, creating insight into costs, and establishing more efficient workflows – issues that are of major importance to the digital transformation. There is a good reason that CFOs often comment that their department is often the most developed in terms of the digital transformation. This does require a solid business model.
- •The CFO wants to achieve profit optimisation. CFOs are tasked with ensuring profit optimisation. Their role has shifted from ‘cost architect’ to ‘business value architect’; CFO actually help with creating more value and thereby achieving profit optimisation. Consider the improvement of the customer journey through the digital transformation, as discussed in our previous blog. Once the customer journey has been optimised, people begin buying more than they normally would have done. This improves turnover and, combined with cost reduction, end profit.
- •The CFO becomes an influence in terms of data security. Because the CFO has insight into all data and processes, they can see how incredibly rapidly client expectations are changing – particularly in terms of data security and management. This means that they know that expectations at the strategic level will not be met if data protection and data usage are not developed quickly enough. One example is the cloud: the CFO may choose to have all data transferred to the cloud to improve security. to read up on this topic, visit our previous blog about cloud advantages. (https://www.elastique.nl/en/insights/digitale-transformatie-binnen-het-mkb-de-voordelen-van-de-cloud)
Example case: FIFPRO
In our project with worldwide footballer representative organisation FIFPRO, the strength of the connection between the digital transformation and cost saving became apparent. Immediately, the digital transformation led to massive time-savings from its initial version. And time equals money. For example, the global questionnaire saved the analysts four months’ work. Read more about FIFPRO in our case.(https://www.elastique.nl/en/cases/fifpro)
As the expert in the field of digital transformation, we are increasingly in contact with SME business CFOs. Because we know that the issue at stake is profit optimisation, they feel understood – and tell us as much. Do you have a case you want to discuss? Contact us today.
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