Digital transformation can be perceived as both- a challenge and an opportunity. Digitization has made the rigid industry boundaries obscure which used to start with the media, content, and communications industries and it is, now, venturing into every sphere. The new digital business world has no pre-defined boundaries or limitations.
Technology-led business disruption, today, is not a choice but a rule. As we know, transformative technologies such as artificial intelligence (AI) tools, blockchain, virtual reality (VR), augmented reality (AR), and 3D printing, increased hyper-connectivity through the Internet of Things (IoT), and smarter decision making through big data analytics are altering the world and businesses today. Hence, it has become extremely crucial for CXOs to embrace the digital transformation.
As the worldwide spending on these projects is expected to surpass $2.1 trillion by 2021, the need of embracing digital transformation and new age technologies at the core of business processes is no longer a question for CXOs, if they are aiming to create value for customers.
While the journey of digital transformation is blurring the business boundaries, it is also blurring the roles of CXOs, bringing CIOs and CFOs to the front line.
Gone are the days when finance was just an administrative function focusing on cash flow, capturing numbers, and reporting to stakeholders with very insignificant amount of interactions with other departments. In today’s networked and collaborative world, finance increasingly works in an advisory capacity to solve problems and set objectives across the enterprise.
This change demands CFOs to add strategic value, using their view of cost and revenue drivers to protect margin while helping grow the organization. They are measured on their ability to measure results and contribute to actualizing company strategy.
Now to achieve this, a growing number of CFOs are collecting and analyzing shedloads of business data from across the organization and use it for decision support, forecasting & budgeting. As this is impossible without a proper digital strategy and software tools, this brings CFOs at the epicenter of the true digital natives. It only makes sense that they assume a leadership role in mapping the issues that boards want technologies like big data and AI to address, and in shaping their organization’s response to emerging business models for the digitally-oriented economy.
There is no doubt to the fact that financial mindset plays a very crucial element in the digital transformation of an organization. The Finance function is central to digitalization within the organization, as it allocates resources for growth. With the CFO in the driver’s seat, project mindset can actually shift away from reductive and short-term thinking towards how to deliver ROI, value, revenue benefits and sustainable cost-effectiveness. CFOs can determine the cost-effectiveness and added value that digital processes and technology can bring to the wider organization.
As the expectation on finance has shifted from reliably recording and reporting numbers to providing strategic insight, more and more CFOs are leaving legacy technologies and manual processes behind, replacing them with automation, analytics, machine learning and Cloud deployments. They are seeing what works, what doesn’t, what skill sets are required, and as such can better anticipate the impact of culture and process on success.