Dinosaurs or Drivers; the Fork in the Road for CFOs

Picture: Unsplash

Identifying exactly where the CFO is placed when it comes to applying digital processes to the Finance function, has evolved into an interesting and timely issue.

There’s a perception that some CFOs might be slower to digitally transform than other key business drivers. But there’s also a school of thought that if some CFOs are dragging their feet, that there is a good reason behind their movement.

According to Simon Peterson, managing director APAC, FinancialForce the modern CFO isn’t necessarily slower, but they want information at their fingertips that they can trust.

“This comes from various sources and needs to look forward as well as back. Transformation efforts have over the past few years focused on front office, mostly those that generate revenue for the business. These have typically included CRM, Customer Service and Service Delivery (PSA) solutions,” Mr Peterson says.

“However, it’s clear that to gain insights and make better decisions, a CFO needs all of this information together, in an environment that is trusted and easy to use. So while not slower, it's often a priority to get the foundational operational data first. The CFO typically signs off on these changes, and more and more are looking to drive financial transformation at the same time. In 2021 business models are changing rapidly, as such the modern CFO is fundamental to these efforts.”

Simon Peterson, managing director APAC, FinancialForce. Picture: Supplied

Mr Peterson claims the gap between the CFOs who are moving to drive financial transformations and those who are dragging their feet, is starting to narrow – with most CFO’s recognizing the need to transform.

“It's how you deal with the current inertia that sets apart those who will succeed and those who won’t. With what is going on globally, with economic headwinds and pandemic uncertainty, I’m seeing an increased focus on accurate cashflow and forecasting capability,” Mr Peterson says.

“You can’t do that without a modern transformed finance environment. Easy to use, accurate analytics and trusted information with the ability to predict are fundamental to a CFO’s ability to cope with the change.”

“The finance function is critical to any business that’s looking to meet the current challenges and prosper. That’s not going away. I think individuals who don’t look to innovate and leverage technology will be replaced by others who do.”

If there’s one thing businesses learned in the last twelve months is that we must all expect the unexpected. According to Simon Peterson, there’s a growing momentum to continually adapt and change business models.

“A clear stand out is the ‘as a service’ model, where many traditional companies are changing how they deliver products to their customers. Software as a service was an early step, but now automotive companies are offering ‘Cars as a service’, replacing the upfront purchase with a subscription,” Mr Peterson says.

"We must all expect the unexpected." Picture: Unsplash

“New revenue streams are critical, the dinosaur CFO will miss these types of opportunities, and will not have the infrastructure to move fast and compete in this new paradigm.”

“And for those persistent dinosaurs? If 2020 is anything to go by, the asteroid has hit. Those who are not already adapting will be doing something else pretty fast, or be out of business. They will clearly not be the trusted advisor to their CEO.”

On the topic of digitally savvy finance leaders, Mr Peterson maintains these people have their fingers on the pulse; not only do they know what’s going on in their business, they understand where growth is coming from and are able to adapt to changing market conditions.

“Driven by data and insights, they have a point of view based in fact. Any board looking to succeed will listen to this point of view. I would also hope that other board functions in a business have a similar set of data and facts. If anything, it raises the game for everyone,” Mr Peterson says.

“The board discussion should be about adapting, new revenue streams and understanding opportunity. The savvy finance leader is central to that informed discussion.”

While Mr Peterson maintains the traditional CFO’s role in finance does not go away, the traditional accounting and finance functions remain.

“However, these alone are the domain of the dinosaur. A CFO in the digital office of finance needs to craft new business models, plan for disruption, be agile and be able to create outcome-based offerings in real time. The new finance function doesn’t simply generate reports, budgets and plans. It also works with internal stakeholders and customers to provide innovative experiences and organisation-wide value,” Mr Peterson says.

“This requires a shift in long-established mindsets along with a new level of visibility, timely data and an ability to rapidly redefine business models. The “Digital Office of Finance” needs to move from finance analyst to business model strategist, they need to be customer success focused not product-focused, they need enterprise-wide know-how, they need the ability to make real-time decisions based on trusted accurate analytics.

“They must move from static forecasts to a rolling predictive forecasting model, aided by modern AI technology.”

"A CFO in the digital office of finance needs to craft new business models." Picture: Unsplash

Simon Peterson’s tips for CFOs yet to move to a digital finance strategy

· Listen to your customers; are you easy to deal with or are there consistent bottlenecks? Ask simple questions, such as “How easily do you invoice and collect?” “Have you added staff recently in these areas and why?”

· Does your team take huge amounts of time to gather and collect information for you to make decisions?

· Is the way you’ve always done things going to work for your customers in 2021?

“Most CFO’s will have asked many of these questions. Are all your operational systems providing you the insights you need to be fast, efficient and accurate? If not, you’ve got a journey to go on. First, you need to define what “great” should look like, recognize you’re not there and understand the cost, both to your career and your business of doing nothing,” Mr Peterson says.

“Modern finance leaders need modern technology. They need information gathered enterprise-wide, a single source of the truth that can both be assessed and rapidly modeled, and above all they need to be able to provide insights that allow an organization to be customer-obsessed.”

“Successful modern organizations who have digitally transformed show all these traits and are able to continually pivot their business models to take advantage of new and changing opportunities.”

Follow me to see more articles like this.

...

Follow