In the past, finance was solely regarded as an accounting function and a CFO was a mere financial custodian. The world is changing at a rapid rate and the CFO's role is no exception. In the digital age, an organization's success depends on how well its leaders understand and respond to the impact of digital technology. Deloitte defines this transition to digital as the next generation finance ecosystem that utilizes disruptive technology, innovation, data and people to elevate and differentiate the capabilities of the finance function. This means that CFO's can now be instrumental in transitioning their companies to digitally-enabled businesses since their role will be expanding from just reporting and budgeting into a broader strategic role.
This strategic role will require them to start leveraging profit pools that are right for disruption, they will be expected to have a clear view on how the technological landscape is evolving, and how digital spend can drive value creation. PwC reckons boards, and business teams are now looking at finance departments to help them navigate through a digital age and if finance cannot provide the necessary insights, it risks being side-lined. They will lose influence to departments like Marketing and IT.
Here is what the digital CFO has to acquaint themselves with in order to keep abreast with dynamic trends in the industry.
Utilize IOT-enabled processes
IOT can grow revenue, cut costs, and save time – and Finance may have a special interest in driving the organization strategy around IOT. For example, the CFO of a healthcare organization should particularly be interested in the patient monitoring of IOT-enabled devices (e.g., wearable monitors).
KPMG jots digital labour as one of the things the digital CFO should leapfrog into. They reckon robotic process automation (RPA), machine learning and cognitive technology holds the promise of transforming business services and creating a new category of digital labour. A digital CFO should be able to maximize these opportunities, which will ultimately aid in achieving unparalleled gains in efficiency and cost effectiveness in the company.
Use new metrics
Business models are now very different than 10 years ago, terms like experience, stickiness, and behaviour are now as crucial as traditional metrics like profit and loss. Intangible assets such as brands, customer relationships, intellectual property and human capital have become significant value drivers in business. Leading Finance executives suggest the need to identify new KPI's to accommodate the intangibles, as traditional Finance metrics are not always able to measure these.
Based on the industry you are in, as a CFO in the digital age, you must device new metrics that will drive the financials of the company; you must understand and manage big data as part of business operations as you will be expected to be a connector between the data scientist and business. Data will determine the future.
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