Part 1 of “Leading Through Digital Transformation” series
Every finance leader of a small or midsize business has a to-do list that’s a mile long. Controlling growth and communicating performance results to a community of investors consisting of owners, shareholder, banks, insurers, and – last, but not least – employees. Keeping a critical eye on threats and opportunities as the company expands its customer base, supplier network, and workforce. Protecting the brand from regulatory, environmental, and human capital risks. And to maintain a growth-oriented mindset, they must be hands-on and knee-deep in details.
Though these responsibilities may be enough to keep anyone busy, most firms do not have the luxury of having one executive managing one particular area. Such is the case for finance leaders who – in a lot of instances – have the distinction of also heading HR, procurement, supply chain, and a variety of other functions. In fact, the CFO Research study, “Embracing the Promise of a Digital Economy,” recently revealed that executives from small and midsize businesses believe that finance’s influence will continue to grow – especially when it comes to IT responsibilities.
Source: “Embracing the Promise of a Digital Economy,” a CFO Research report sponsored by SAP, 2016.
Finance leaders typically wear multiple hats out of necessity. But little do they know that they are actually positioning themselves to be the voice of reason and value when it comes to digital transformation leading their companies into the next chapter.
The hybrid CFO: The best scenario for digital transformation
The digital economy has complicated the small and midsize business environment. Nowadays, there is greater focus on the business model and its inherent complexities. And even the conversation about digital transformation has shifted from “Should go through with it?” to “When and how are we going to make this happen?” and “Why we didn’t invest in this sooner?”.
Every digital transformation depends on technology, but the true value is realized through the people and processes using that technology. Business and IT are increasingly intertwined, and that’s a good thing when you consider that the interplay between the two can uncover deeper insight and value than either function could achieve alone. But first, leaders must have a broader perspective of the needs of their company – one that goes beyond just their specific area. Digitalization is 100% a business topic with technology being the enabler – versus a roadblock like it has been for the last two decades.
Enter the hybrid responsibilities of today’s finance leaders. Because of their intimate involvement in day-to-day operations, activities, and decision making across a variety of business areas, finance leaders are keenly aware of the opportunities digitalization presents and how changes in each function impact every area. In turn, they are more likely to inject a well-rounded view into the current and future state of the brand, a sensible road map, and, above all, value for customers as well as the firm.
The small business CFO: Infusing digital transformation with sensibility, insight, and value
Digital transformation marks the beginning of new business models, revenue streams, and unprecedented expansion. Unfortunately, most companies are unprepared to realize these advantages.
For finance leaders, this is an opportune time to become the qualified champion for advancing digital transformation – not only in finance, but throughout the entire firm. Here are three ways finance leaders can get started right now:
- Build a case for the CEO. Acting as growth-focused strategists, finance leaders can provide CEOs with a perspective that proves how the entire company can better proactively manage and respond to disruption from technological, economic, and competitive forces. More important, CEOs need to know that they can be personally impacted as well. For example, finance leaders can demonstrate how advanced analytics and data management can enhance decision-making capabilities – from the office of the CEO to the plant manager on the shop floor.
- Engage executive peers in results-driven, relatable discussion. All too often, adopting the latest and most popular technology available can be very tempting – even if the price tag outweighs its benefits. With their typically common-sense approach, finance leaders can help their executive peers rise above the lure of shiny, new “digital toys” serving a single department and explore the opportunity of achieving tangible bottom-line improvements when focusing on a sophisticated enterprise management platform.
- Form a strategic alliance with IT. Whether the IT department comprises one IT administrator or dozens of IT techs led by a formal CIO, the need for a strategic partnership is all the same. Exchanging ideas, experience, knowledge, and skills from the technical side and business side can help ensure the right investments are made. Not only does this collaboration better equip the firm to deliver sustainable differentiation and drive innovation, but also provide a secure and cost-effective environment to support core processes.
Even though building the necessary relationships and business cases for digital transformation can be a daunting undertaking, this is a once-in-a-lifetime opportunity to set up a small or midsize business for a prosperous future in the economy. And whether they know it or not, modern finance leaders already have the knowledge required to help their business emerge as a sustainable, end-to-end digital business.
To learn how your business can embrace the promise of the digital economy, check out CFO Research’s recent report “Embracing the Promise of a Digital Economy.” Over the next two weeks, we will share additional insights from this research. Be sure to check every Wednesday for new installments to our blog series “Leading Through Digital Transformation,” to explore the various leadership roles in today’s growing small and midsize companies.