Becoming a Digital Enterprise: The Role of the CFOs
With the digital transformation, the role of the Chief Financial Officers (hereafter “CFO”) has evolved from a straight-forward operational leadership into a strategic guidance of the overall direction a business should strive for. However, what are the actual benefits of the digital transformation for the CFOs?
Why should a CFO care for all advances offered by digital transformation?
Directly or indirectly, CFOs will come in touch with digital transformation. In the first place, digital transformation is connected to costs, effectiveness and technological advances. Financial leaders can drive the following benefits from active engagement in the digital journey of their enterprises:
- Improved Financial Processes
According to the Oxford Economics Survey, 73% of the surveyed financial leaders believe that automation is improving efficiency.1 With the aid of today’s digital tools, CFOs can easily automate all manual processes that are time-consuming and costly. Robotic Process Automation (hereafter “RPA”) is a cornerstone for optimization of financial services. RPA accelerates digital transformation of business processes by automatically replicating tedious actions that have no added value. Cloud based mechanisms merge multiple systems and architectures and bring forward one unified platform for performance of operational tasks. Artificial Intelligence (hereafter “AI) enhance the processes, bring in depth to processes and remove irrelevant complexity.
Highly automated and standardized processes result in high performance and process efficiencies that can be reached only by the application of the digital tools.
- Boost in Analytical Capabilities
Predictive Analytics and Machine Learning unveil the power of data, one of the main assets an enterprise is owning today. Big data can be processed at a completely other level than before, providing a real-time insight into the actual business situation. Traditional planning and forecasting are being overruled by new functions and algorithms. The CFOs have the tremendous possibility to convert standard analytics into an outstanding asset that is worked on and accessed in real-time by the financial team as well as by management.
- Enhanced Decision-Making & Delivered Value
Due to the above-mentioned enhanced analytical capabilities with the modern digital trends, the entire enterprise can rely on the powerful insights extracted from their data. The ability to react and act of an enterprise in tremendously improved – decisions can be made in a shorter time and more effectively due to precise data analysis. With this, the CFO is the key person vested with the power to disclose the “legend” behind financial numbers and enable the evaluation of impact of all business transactions and opportunities. This is one of the key aspects, which shows that with the digitalization, the CFO’s role is being magnified.
- Cost Efficiency
Minimization of costs is one of the key responsibilities of a CFO. By automating and harmonizing the financial processes, a large amount of manual work is being diminished, which results in visible cost savings. Automation, on the other hand, secures that tasks are carried out continuously. Moving away from traditional on-premise solutions to the cloud could likewise result in decrease of costs on expenditure capital, onsite servers, etc. In the long-term all the enhancements in the area of process improvement will result in lower overall costs.
- Lowered Risk & Error Rate
Machine Learning (ML) technologies secure greater value from core processes, like Cash Management. ML automatically “learns” from historical data, creates its own logic and helps to reduce potential errors. In the same way, compliance process, so crucial for finance, will also result to be error-free.
With the application of latest technology to crucial financial processes, the CFOs are directly minimizing the risks, primarily connected to the human factor.
- Agility and Scalability
Due to insights-driven nature of the automated processes, the CFOs will assure timely and effective response of the entire organization to any possible business challenge or disruption. The digital infrastructure will also enable the finance department to scale its operations based on the need and growth.
It is apparent that digital transformation is not only a goal for an enterprise that would like to gain competitive advantage. It is also a key subject on any CFO’s agenda. It entails exceptional benefits for the position of the Chief Financial Officer which vest unique power in their hands and can mark a new era of their roles in an enterprise.
This article was created in close collaboration and with the contribution of Christian Brandl, a principal business consultant in the business unit CFO Advisory within SAP Germany.
This blog post is also published on the D!gitalist Magazine (link).