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Is Digital Transformation The Secret To Getting CFOs Back To Strategy?

Estelle Lagorce

Compared to two years ago, CFOs report they are spending more time on their “operator” role and less in their “strategist” role, according to the results of a recent Deloitte Consulting LLP’s CFO Signals survey. And they don’t like it.

It’s a tilt that bodes badly for both CFOs and their organizations, diverting the CFO from the all-important task of helping plan for long-term growth.

These concerns and how to address them were the subject of a recent Webinar, “Leading the Way to Financial Excellence through Digital Transformation,” hosted by the Institute of Management Accountants (IMA) and attended by 930 finance professionals from 40 countries. Participants heard critical facts, figures, and findings from Susan di Zerega, director at Deloitte Consulting LLP and Birgit Starmanns, senior director for Product Marketing at SAP.

A tricky balancing act

During the Webinar, the speakers outlined the role of strategist versus operator, underlining why CFOs’ best intentions are being sidelined by pressing operational demands:

  • The CFO as operator: focuses on the running and efficiency of the finance department; balances cost and service levels; defines and evolves finance’s operating model; deals with talent management
  •  The CFO as strategist: is a driver of strategy for the company’s future; provides to the Board a financial perspective on innovation and growth; improves risk awareness and decision making and translates expectations of the capital markets into business imperatives

Why CFO as strategist is needed now more than ever

Besides the CFO’s own preference, the list of why CFOs need to increase, not lessen, their strategic role is both long and compelling, rooted in technological concerns and in the accelerated pace of doing business. The Webinar highlighted some of the major trends showing why CFOs need to offload operational tasks and concentrate on strategy:

  • External conditions are becoming increasingly complex.
  • There is heightened pressure to support global growth initiatives.
  • Millennials have put into play a whole new work style that embraces networks and mobility. Organizations have to keep up with them.
  • The adoption rate of technological innovations is continually accelerating.
  • There’s an ever-increasing requirement to reduce costs in the finance department.
  • Cybersecurity is an ongoing source of concern in a business world powered by technology – and CFOs must contribute to critical decisions on risk management.

These factors are creating a new and more difficult reality for the CFO. While doing business in today’s complex global world requires greater strategic involvement, it also places greater demands on the CFO’s organizational responsibilities – a vicious and hard-to-break cycle.

Enter digital transformation: the CFO’s lifeline to greater strategic involvement

The Webinar highlighted how technological innovations can update, innovate, and streamline operational functions and procedures that divert time, energy, and resources from a CFO’s strategic focus.

A few examples of how new technologies bring balance to the CFOs dual roles of strategist and operationalist:

  • Planning and predictive finance: The digital transformation allows for a single consolidated view of all planning and forecasting information. More options are available and fewer opportunities are missed because lag time for updates is eliminated.
  • Financial close: New technologies make it possible to look at transactions in real time with continuous intercompany reconciliation and financial reporting visibility. Technology helps eliminate end-of-period batch bottlenecks and can be used to calculate key performance indicators.
  • Fraud management: Top-down and bottom-up information helps pinpoint and focus on key areas of cyber vulnerability. Predictive models help detect patterns. New technologies also enable real-time performance analysis and automated mitigation responses to fraud, should it occur.
  • Cash management: New cash management solutions combine analytical functions with related transactions. Integrated bank account management becomes available, allowing for the central administration of bank accounts and signatories. Nondisruptive cloud or on-premise deployment options can be utilized if desired.

The experts agree: new technologies are becoming essential tools in helping CFOs successfully reimagine their roles as they help reimagine their companies.

For more information on this topic, listen to the Webinar on demand on the IMA Web site.

To learn more about how finance executives can empower themselves with the right tools and play a vital role in business innovation and value chain, visit the SAP finance content hub, which offers additional research and valuable insights.

 And join the upcoming live CFO.com panel Webinar with Deloitte on January 21, 2016, “Ask the Experts: Prepare Your Finance Team for Success in the Digital World.”

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Estelle Lagorce

About Estelle Lagorce

Estelle Lagorce is the Director, Global Partner Marketing, at SAP. She leads the global planning, successful implementation and business impact of integrated marketing programs with top global Strategic Partner across priority regions and countries (demand generation, thought leadership).

The Future Of Supplier Collaboration: 9 Things CPOs Want Their Managers To Know Now

Sundar Kamak

As a sourcing or procurement manager, you may think there’s nothing new about supplier collaboration. Your chief procurement officer (CPO) most likely disagrees.
Forward-thinking CPOs acknowledge the benefit of supplier partnerships. They not only value collaboration, but require a revolution in how their buying organization conducts its business and operations. “Procurement must start looking to suppliers for inspiration and new capability, stop prescribing specifications and start tapping into the expertise of suppliers,” writes David Rae in Procurement Leaders. The CEO expects it of your CPO, and your CPO expects it of you. For sourcing managers, this can be a lot of pressure.

Here are nine things your CPO wants you to know about how supplier collaboration is changing – and why it matters to your company’s future and your own future.

1. The need for supplier collaboration in procurement is greater than ever

Over half (65%) of procurement practitioners say procurement at their company is becoming more collaborative with suppliers, according to The Future of Procurement, Making Collaboration Pay Off, by Oxford Economics. Why? Because the pace of business has increased exponentially, and businesses must be able to respond to new market demands with agility and innovation. In this climate, buyers are relying on suppliers more than ever before. And buyers aren’t collaborating with suppliers merely as providers of materials and goods, but as strategic partners that can help create products that are competitive differentiators.

Supplier collaboration itself isn’t new. What’s new is that it’s taken on a much greater urgency and importance.

2. You’re probably not realizing the full collective power of your supplier relationships

Supplier collaboration has always been a function of maintaining a delicate balance between demand and supply. For the most part, the primary focus of the supplier relationship is ensuring the right materials are available at the right time and location. However, sourcing managers with a narrow focus on delivery are missing out on one of the greatest advantages of forging collaborative supplier partnerships: an opportunity to drive synergies that are otherwise perceived as impossible within the confines of the business. The game-changer is when you drive those synergies with thousands, not hundreds of suppliers. Look at the Apple Store as a prime example of collaboration en masse. Without the apps, the iPhone is just another ordinary phone!

3. Collaboration comes in more than one flavor

Suppliers don’t just collaborate with you to provide a critical component or service. They also work with your engineers to help ensure costs are optimized from the buyer’s perspective as well as the supplier’s side. They may even take over the provisioning of an entire end-to-end solution. Or co-design with your R&D team through joint research and development. These forms of collaboration aren’t new, but they are becoming more common and more critical. And they are becoming more impactful, because once you start extending any of these collaboration models to more and more suppliers, your capabilities as a business increase by orders of magnitude. If one good supplier can enable your company to build its brand, expand its reach, and establish its position as a market leader – imagine what’s possible when you work collaboratively with hundreds or thousands of suppliers.

4. Keeping product sustainability top of mind pays off

Facing increasing demand for sustainable products and production, companies are relying on suppliers to answer this new market requirement.

As a sourcing manager, you may need to go outside your comfort zone to think about new, innovative ways to collaborate for achieving sustainability. Recently, I heard from an acquaintance who is a CPO of a leading services company. His organization is currently collaborating with one of the largest suppliers in the world to adhere to regulatory mandates and consumer demand for “lean and green” lightbulbs. Although this approach was interesting to me, what really struck me was his observation on how this co-innovation with the supplier is spawning cost and resource optimization and the delivery of competitive products. As reported by Andrew Winston in The Harvard Business Review, Target and Walmart partnered to launch the Personal Care Sustainability Summit last year. So even competitors are collaborating with each other and with their suppliers in the name of sustainability.

5. Co-marketing is a win-win

Look at your list of suppliers. Does anyone have a brand that is bigger than your company’s? Believe it or not, almost all of us do. So why not seize the opportunity to raise your and your supplier’s brand profile in the marketplace?

Take Intel, for example. The laptop you’re working on right now may very well have an “Intel inside” sticker on it. That’s co-marketing at work. Consistently ranked as one of the world’s top 100 most valuable brands by Millward Brown Optimor, this largest supplier of microprocessors is world-renowned for its technology and innovation. For many companies that buy supplies from Intel, the decision to co-market is a strategic approach to convey that the product is reliable and provides real value for their computing needs.

6. Suppliers get to choose their customers, too

Increased competition for high-performing suppliers is changing the way procurement operates, say 58% of procurement executives in the Oxford Economics study. Buyers have a responsibility to the supplier – and to their CEO – to be a customer of choice. When the economy is going well, you might be able to dictate the supplier’s goods and services – and sometimes even the service delivery model. When times get tough (and they can very quickly), suppliers will typically reevaluate your organization’s needs to see whether they can continue service in a fiscally responsible manner. To secure suppliers’ attention in favorable and challenging economic conditions, your organization should establish collaborative and mutually productive partnerships with them.

7. Suppliers can help simplify operations

Cost optimization will always be one of your performance metrics; however, that is only one small part of the entire puzzle. What will help your organization get noticed is leveraging the supplier relationship to innovate new and better ways of managing the product line and operating the business while balancing risk and cost optimization. Ask yourself: Which functions are no longer needed? Can they be outsourced to a supplier that can perform them better? What can be automated?

8. Suppliers have a better grasp of your sourcing categories than you do

Understand your category like never before so that your organization can realize the full potential of its supplier investments while delivering products that are consistent and of high quality. How? By leveraging the wisdom of your suppliers. To be blunt: they know more than you do. Tap into that knowledge to gain a solid understanding of the product, market category, suppliers’ capabilities, and shifting dynamics in the industry, If a buyer does not understand these areas deeply, no amount of collaboration will empower a supplier to help your company innovate as well as optimize costs and resources.

9. Remember that there’s something in it for you as well

All of us want to do strategic, impactful work. Sourcing managers with aspirations of becoming CPOs should move beyond writing contracts and pushing PO requests by building strategic procurement skill sets. For example, a working knowledge in analytics allows you to choose suppliers that can shape the market and help a product succeed – and can catch the eye of the senior leadership team.

Sundar Kamak is global vice president of solutions marketing at Ariba, an SAP company.

For more on supplier collaboration, read Making Collaboration Pay Off, part of a series on the Future of Procurement, by Oxford Economics.

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The CFO Role In 2020

Estelle Lagorce

African American businessman looking out office window --- Image by © Mark Edward Atkinson/Blend Images/CorbisThe role of the CFO is undergoing a serious transformation, and CFOs can expect their role to continue to evolve, according to a recent CFO.com article by Deloitte COO and CFO Frank Friedman.

In the futurist article, Friedman says one of the biggest factors that will contribute to the CFO’s significant change over the next five years is technology.

Digital technology is obviously expected to drive change in high-tech companies, but Friedman says it’s industries outside of the tech sectors that are of particular interest, as they struggle to understand how to grasp and harness the digital capabilities available to them.

Working with high tech in low-tech industries

Five years from now, a finance team may be defined by how well it uses technology and innovative business tools, regardless of what industry it’s in. The article outlines some examples of ways that digital technology will increasingly be used by CFOs in “non-tech” sectors:

  • Predictive analytics: CFOs in manufacturing companies can forecast results and produce revenue predictions based on customer-experience profiles and current demand, instead of comparing to previous years as most companies still do today.
  • Social media and crowdsourcing: You may not think CFOs spend a lot of time on social media or crowdsourcing sites, but these methods can actually expedite finance processes, such as month-end responsibilities of the finance organization.
  • Big Data: CFOs already have a lot of data at their fingertips, but in 2020 they will have even more. CFOs in both tech and non-tech sectors who understand how to use that data to make valuable, informed decisions, can strategically guide their company and industry in a more digitally oriented world.

To do this, Friedman says CFOs can lead the way by addressing some critical areas:

  1. Know the issues: Gather the key questions that leaders expect Big Data analytics to answer.
  1. Make data easily accessible: Collect data that is manageable and easy to access.
  1. Broaden skills: The finance team needs people with the skills to understand and strategically interpret the data available to them.

The tech-savvy CFO

The role of today’s CFO has already expanded to include strategic corporate growth advice as well as managing the bottom line. In 2020, Friedman says expectations placed on the CFO are presumed to be even greater, and CFOs will likely need a much more diverse, multidisciplinary skill set to meet those demands.

The article details several traits and skills that CFOs will need in order to keep up with the pace of digital change in their role.

  1. Digital knowledge: CFOs must be tech-savvy in order to capitalize on technical innovations that will benefit their company and their industry as a whole.
  1. Data-driven execution: CFOs will need the ability to execute company strategy and operations decisions based on data-driven insights.
  1. Regulatory compliance: Regulations continue to be more stringent globally, so CFOs will need to be proficient at working closely with regulators and compliance systems.
  1. Risk management: With the growing global economy comes increased cyber and geopolitical risks worldwide. The CFOs of 2020, especially those in large multinational organizations, will need to have the expertise to monitor and manage risk in areas that may be unforeseen today.

The future CFO’s well-rounded resume

By 2020, the CFO role will require much more than just an accounting background. According to Deloitte’s Frank Friedman, “CFOs may need to bring a much more multidisciplinary skill set to the job as well as broader career experiences, from working overseas to holding positions in sales and marketing, and even running a business unit.”

So if you’re a current or aspiring CFO, you have five years to round out your resume with the necessary skills to be ready for the digitally driven role of the CFO in 2020.

The above information is based on the CFO.com article What Will the CFO Role Look Like In 2020?” by Deloitte COO & CFO, Frank Friedman – Copyright © 2015 CFO.com.

Want to learn more about best practices for transforming your finance organization? View the SAP/Deloitte Webinar, “Reshaping the Finance Function”.

For an in-depth look at digital technology’s role in business transformation, download the SAP eBook, The Digital Economy: Reinventing the Business World.

To learn more about the business and technology factors driving digital disruption, download the SAP eBook, Digital Disruption: How Digital Technology is Transforming Our World.

To read more CFO insights from a tech industry perspective, read the Wall Street Journal article with SAP CFO Luka Mucic: Driving Insight with In-memory Technology.

Discover 7 Questions CFOs Should Ask Themselves About Cyber Security.

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Estelle Lagorce

About Estelle Lagorce

Estelle Lagorce is the Director, Global Partner Marketing, at SAP. She leads the global planning, successful implementation and business impact of integrated marketing programs with top global Strategic Partner across priority regions and countries (demand generation, thought leadership).

4 Ways to Digitally Disrupt Your Business Without Destroying It

Christopher Koch

To learn more about how to disrupt your business without destroying it, read the in-depth report Digital Disruption: When to Cook the Golden Goose.

Download the PDF (1MB)

 

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Christopher Koch

About Christopher Koch

Christopher Koch is the Editorial Director of the SAP Center for Business Insight. He is an experienced publishing professional, researcher, editor, and writer in business, technology, and B2B marketing.

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Digital Transformation Needs More Than Technology

Andreas Hauser

Digital transformation is a hyped-up topic these days. But it is much more than a buzzword. Technology trends like hyper-connectivity, Big Data, cloud, Internet of Things, and security provide new opportunities for companies to re-imagine their business and how they engage with their customers and users.

But what happens if you develop an amazing technical solution that people cannot use?

Let me tell you a story.

On a business trip recently, I had an experience that some of you might have also encountered from time to time. I wanted to enter the parking garage of a hotel and had to get a parking ticket to get in — sounds simple. The machine looked pretty modern. It had an integrated monitor and several buttons on the side. First I touched the screen, but nothing happened — it was not a touchscreen. Then I pressed some buttons on the side, and again, nothing happened. The rounded button at the bottom finally got me a ticket. Great technical solution … but not usable.

Endurance testing experiences like this one are actually easily preventable when taking into consideration human needs (desirability). This makes very clear that we need to connect three elements—viability, feasibility, and desirability—to be successful and remain competitive in the digital era.

Wikipedia defines digital transformation as “application of digital technology in all aspects of human society.” This is why companies with the most successful digital transformations have focused on people and applied a design-led approach.

One company that has excelled at creating a pleasant experience is Uber. Their app not only tells you how long it will take the car to arrive, but you can also watch the arrival on your mobile device. I like the user interface. But here’s what I personally like most about the Uber experience: You get out of the car, keep your mobile phone in your pocket, do nothing, pay automatically without thinking about how much you need to tip the driver, and get the receipt via e-mail.

That is the difference between simply focusing on the user interface and providing a great customer and user experience. To design and develop such a solution, you need to know what people really desire. Technology certainly plays a very important role to make this experience a reality, and you must be clear about the business model.

Slide1.JPG


Design-led digital transformation means leveraging breakthrough technology trends, re-imaging business processes and business models, and re-imaging the customer and user experience to achieve design-led innovations.

In today’s digital economy, companies understand that the experience their customers and users have must be the core focus of its brand and survival. Customers and users drive the current and future state of any business. Products and services, whether they are delivered to internal or external customers, must create a value for them and the company. Therefore, customers and users need to be an integral part—not an afterthought—of the entire product development process.

Design thinking to focus on human needs

To better understand what that experience can be, companies are using design thinking – a human-centered approach to innovation – and are putting the customer and user into the center of all activities. Design thinking focuses on human needs, problem finding, working in inter-disciplinary teams across the innovation lifecycle, and a fail-fast, fail-early approach.

My observation from about 500 customer projects is that more and more IT organizations are starting to apply design thinking within their organization. They are hiring designers to better understand the needs of their customers and users and are translating these needs into an experience design. In the past, they simply collected requirements from the business and implemented functions, features, and business processes. This was sufficient in last-decade enterprises, but consumerization of IT requires re-thinking of this approach.

Create business value with human-centered design

The goal is to create business value by engaging with customers and users throughout the end-to-end process—from discovery to design to delivery—and apply design thinking combined with agile methodologies. It is not about simply creating a cool design; rather it is all about creating business value and outcomes.

To do this, business and IT need to work hand in hand to take the company toward that single consumer’s experience.Slide2.JPG

Let’s look at an example.

As part of its business strategy, Mercedes-AMG, the sports car brand of Mercedes-Benz, aimed to increase its production drastically while keeping the excellent quality standards that have always characterized its products. In a co-innovation project, we have engaged on an intensive research plan and applied the principles of design thinking and agile software development to bring the Mercedes-AMG vision to life: a customizable collaborative planning solution that supports cross-functional competence teams and increases efficiency during the three-year production process. The solution, based on SAP HANA, provides access to relevant data in a holistic way and enables a seamless team collaboration in the remodeled process. One of the key success factors was engaging with users throughout the entire process by observing how they work and iterating on solutions with them.

Digital transformation is a journey, not just a one-time project. Ultimately, enterprises want to prepare their organization for sustainable design-led digital transformation.

So how can you embrace the human aspect of design in your digital transformation? This is our credo: Apply design thinking to engage with your customers and most importantly, with users, right from the beginning, in an iterative, user-centric design process.

If you are interested in more customer stories, check out the UX Design Services website. You can also find more information in this presentation, or check out this video recording.

This article originally appeared on SAP Business Trends.

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Andreas Hauser

About Andreas Hauser

Andreas is global head of the design and co-innovation center at SAP. His team drives customer & strategic design projects through Co-Innovation and Design Thinking. Before he was Vice President of User Experience at SAP SE for OnDemand Solutions.