In the past, the primary focus of a Chief Financial Officer (CFO) involved ensuring accuracy in relevant reporting, Balance Sheet impacting strategies and Analytics. But since digital transformation has become a matter of great importance to business in recent years, CFOs now have a say in major technology decisions that can directly affect profits. Digital Transformation involves much more than IT.
IDC, a global intelligence company, thinks that by 2025, Digital Transformation [DX] spending will be more than double what it was in 2020, reaching $2.8 trillion. Expenditures in digital tools and services will be a major driver of this development. The financial services sector is expected to deliver the fastest growth in DX spending.
Experts say that a successful transformation requires a culture that supports the strategic goals that drive the adoption of DX and a clear vision of where they want to go. The CEO is responsible for developing the company's vision, but other members of the C-Suite are increasingly involved in carrying it out. IDC describes the "Transformational CFO" as a financial executive who not only involves in conventional financial and reporting tasks but also enables business change and new models of business.
CFOs must understand elements of financial well-being and its linkage to advancement of digital maturity; they need to play a variety of roles—from business virtuoso to technology planner and change pioneer. In addition to having a deep familiarity with the inner workings of the company, the most effective CFOs have one eye on the future as well. You must be able to use financial and operational data in order to map out new opportunities for the business. Furthermore, you must also correctly identify the technologies that will allow your employees to grow faster while keeping risks low. Keep in mind that it's not simply about numbers; it's about people, culture, and technology too.
CFOs leading the Change
CFOs involved in transformation strategy needs to set an example for others – they need to promote efficiency, standardization, digitization, and the people agenda not just in core finance but across the company. All need to adhere to the agreed changes and the CFO can't fall behind simply because he / she is leading the change."
Research by IDC Financial Insights has found that Security and AI spending is increasing faster than overall IT spending in financial services. And the CFO plays a vital role in these areas of growth. The CFO must know how they are doing across all departments. If we want to update and transform our company, how much will it cost, and what will we gain in return? Are the results we're getting from our projects on par with or better than those of other companies in our field? If not, what are we missing?"
Progress is often made up of many small action points, and though they may not sound exciting, they can have a profound impact when put together.
Serving both the Business and the Customers
Digital technology adoption makes it possible for Organizations to concentrate on operational synergies. Improvements in three areas are critical - the elimination of manual processes, the connectivity of crucial systems and the consolidation and democratization of data that enables rational decision-making. Major Technology players – SAP, Microsoft, Intel and the like provides enabling technologies that assist in this process.
To be successful, businesses need to simplify their processes so that they can swiftly act on insights. We need to be able to integrate information flows and connect the dots. The value proposition for executives like the CFO is a simplification for the benefit of the client using automation, analytics, and collaboration tools; standardizing processes; and relying on them across all business divisions to hasten digital transformation.
A CFO's digital transformation initiative creates opportunities for efficiency and innovation that benefit the enterprise's customers. First, consider what would make the clients delighted. What would make their lives easier? After deciding on a set of objectives and methods, the associated metrics can be designed.