In business, as in nature, only the most agile continue to thrive. The digital economy demands that business models and processes be constantly reevaluated to capture new growth opportunities. This is a question of survival as new market entrants beat out incumbents by creating new digital business models, free of existing constraints.
Reimagining growth and strategy
The time is here to reimagine the role of finance in driving corporate growth and strategy. CFOs and their teams should be in the forefront of developing the strategic capabilities that will support sustained profitability and drive competitive advantage. To achieve that goal, the fast implementation of new business models is essential. Platforms should be flexible to easily support new revenue and expense models, providing an infrastructure that enables rapid internal reorganization and greater process automation. In all of these areas, the CFO and the finance department should be poised to take the lead.
To prepare their enterprises for the digital era, companies are making hard decisions on build, buy, or sell, and managing the accompanying risk. Consider this: since 2000, 52% of Fortune 500 companies have been merged, acquired, gone bankrupt, or fallen off the list. To avoid becoming one of these statistics, finance can provide instant insight across several dimensions: portfolio performance, modeling of future investment scenarios, rapid integration of the acquired entities, and a holistic view of overall risk.
New business models needed
To keep pace with rapid changes, innovative finance organizations are using real-time planning and modeling to design, analyze, and simulate planned new business models and the resulting organizational changes. Flexible, modern platforms enable them to rapidly implement these new structures and processes directly, according to a chosen model.
Companies also need to strike a careful balance between how rapidly and how tightly they integrate new businesses. Traditionally, there is a tradeoff. In the digital world, there is an ever-growing need to achieve both simultaneously.
Deploying a central harmonized finance ledger, for example, allows the benefits of a modern platform at a fraction of the cost of a full system implementation. Benefits include:
- Real-time insights across the enterprise including working capital
- Improved performance while closely managing risk across the investment portfolio
- Unlimited transparency, providing more profound financial analysis of existing performance and new business opportunities
- Group-level processes for reporting, global cash management, and global compliance management to drive efficiency
To sum up: Dynamically supporting growth in a digital world doesn’t have to be complicated for the CFO and the finance department. It can run simply when centered around three basic concepts:
- An open and adaptable platform
- Flexible financial modeling
- Model-driven system configuration
To continue the discussion on the pivotal role finance can play in digital transformation, read Digital Finance: Transforming Finance for the Digital Economy and join us at SAPPHIRE NOW, where Thack Brown will be leading the session Reimagine Finance for the Digital Age with a Live System Strategy.