An important aspect of my role as a CFO is spending time with customers. It’s not a common view that a CFO would step beyond the comfort of his or her desk to rub elbows with customers, yet there’s a good reason for it. Who else is going to have the credibility to discuss the impact of an investment on business?
Increasingly, my conversations with customers are related to digital business. If they’re not already discussing it within their company, they’re certainly reading and hearing about it in daily business. I find that many want to talk about software, and as the discussion progresses, they begin to grasp that the digital business environment is much bigger than just software.
Software is for sure an element, and what I try to lead them to understand is that in addition to enabling a new strategy, they can explore new ways to view the world and their business. It’s the perfect opportunity to review their strategy and their process landscape holistically and ask challenging questions, such as whether their business can survive in this digital world. When I engage a customer’s CFO in this discussion, it’s remarkable how quickly they shift modes – and this is where it can be a fun and valuable exercise.
Since this is what we’re doing at SAP, it’s not a theoretical discussion. We’re in the midst of our digital transformation, shifting our business model and how we engage with our customers, looking for areas where technology such as SAP HANA provides an advantage, where we need to change and where we don’t. Digitalization offers an opportunity to review, challenge, and improve. We’re deep into this exercise, which makes it equally compelling when talking with customers.
To help customers understand what digital can bring, I like to ask who is responsible for taking the company digital. It can’t be everybody, and ideally the board and CEO should be involved in the discussion, with a team to help drive it. In recent years, we’ve seen the emergence of chief digital officers, and these roles vary from one company to the next. The bottom line is that you need someone who’s a part of the process, who can translate the digitalization effort into the financial impact, and who has the credibility within the company to lead change. I think this helps clarify why I say it’s not just a software update. This is clearly where CFOs can add significant value by helping to design digitalization strategies and assess their financial viability and impact. At the same time, CFOs need to take a close and careful look at the implications of digitalization on their own finance function and processes.
Illustrating it in another way, in a traditional hotel model, the hotel has to invest in materials – beds and linens, bathroom fixtures, art, televisions, and other expected amenities. This is the model that’s been around a long time. Contrasting with the digital hotel business, Airbnb doesn’t own a single bed, and it is actively competing with traditional hotels around the world. The natural starting point in exploring the digital business environment for a hotel is to ask how they can participate in this new model. What’s the strategy to protect their existing business, and how can they expand into bold new models? What are risks and opportunities thereto? This is the natural discussion a CFO should lead: the impact of investment on business and business strategy by serving as an independent partner.
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, please review the finance content hub, which offers additional research and valuable insights.