As the pace of change has accelerated for businesses everywhere, so has the need to double down on digital transformation efforts, and Chief Financial Officers are right in the middle of it all.
With the rise of automation, artificial intelligence, and big data, CFOs and their finance teams are taking the lead in leveraging new technologies to improve business processes and generate actionable insights.
In this third of a four-part series covering the CFO role, discover how the finance function is using new technologies to drive business strategy and decision-making.
The role of CFOs in leading corporate digital transformation
The finance function manages a complex suite of financial data, ranging from basics like invoices and expense reports, all the way to more sophisticated revenue and expense reporting across company divisions and geographies. Given the role of CFOs in managing all of these activities, many understandably seek digital solutions to organize and analyze the staggering amount of data their company generates every day. According to a 2022 Everest Group survey, 70 percent of CFOs said that “implementing digital technologies to improve efficiency, effectiveness, and stakeholder experience” was their top priority.
As the organization’s financial leader, CFOs are responsible for creating a single source of truth about the organization’s current financial standing and future opportunities. And since the collection, storage, and analysis of all that truth (data) is at the foundation of any digital transformation, the CFO is a likely choice to lead the company’s efforts in that area. A recent KPMG study found that 93 percent of CFOs expect to be actively involved in leading their company’s digital transformation in the next five years.
When CFOs play a role in leading digital transformation and the adoption of new data analysis tools, the following benefits are possible:
• Better decision-making: With improved reporting tools, the finance team can help functional leaders make more data-driven budget decisions.
• More realistic forecasting: Broader access to self-service financial planning tools allows managers to become less reliant on traditional spreadsheets and more involved in scenario planning for their business unit.
• Improved risk management: Transparent access to company data helps the C-suite to become more adept at recognizing and assessing risks such as cyber threats, supply chain disruptions, and talent gaps.
How finance is using tech to drive business strategy
While CFOs and their teams are responsible for tracking spending on technology investments, they can also set an excellent example for implementing the latest digital solutions.
Here are some game-changing technologies finance teams are using to support company strategy and decision-making:
• Software robotics: Robotic process automation (RPA) automates a range of manual finance tasks, from reconciliations to tax calculations, and is often the entry-level step to more advanced digital tools. According to Gartner, nearly 75 percent of finance leaders already use RPA tools.
• Data Science: Whether finance teams hire data scientists or partner with third parties, they are using big data to identify trends in areas such as spending, product and service pricing, and customer preferences.
• Predictive Analytics: AI-powered predictive analytics help finance teams and business units leap from diagnosing current trends to forecasting them, thus making it easier to be proactive in areas such as inventory planning, fraud detection, and risk prevention.
• High-performance computing: Tools like graphics processing units (GPUs) can tabulate and analyze financial performance data hundreds of times faster than traditional reporting systems and spreadsheets, making companies less reliant on traditional month-end and quarterly financial reporting.
As with many other areas of business strategy, CFOs must collaborate with other members of the C-suite to make total digital transformation a reality. Given their stewardship over the lion’s share of company data, CFOs are in a great position to make it happen.
Next, in the final article of the series, we’ll discuss the role of CFOs in managing corporate sustainability and social impact goals. And in case you missed them, read the first two articles in the series, covering the strategic partnership between the CFO and the C-suite and how today’s CFOs manage risk.
Interested in exploring more about the CFO evolution and what skills and competencies are required of today’s financial leaders? Download our Force Multiplier Report on the rise of CFO and executive finance roles.
