Advances in disruptive technology will transform life, business, and the global economy. Based on a recent study by McKinsey Global Institute, the major eight disruptive technologies driving digitization by 2025 will result in an estimated annual global economic value of US$13 to $35 trillion.
Digitization will have a major impact on finance processes and finance professionals, as well. For example, according to The Future of Employment study by Carl Benedikt Frey and Michael A. Osborne, accountants and auditors have a 94% chance that their jobs will be automated.
The responsibility for CFOs to create value while ensuring rigorous oversight and sustainable controllership of their company is growing. CFOs today are acting as business partners and setting sail to build a new and improved system of accountability. They act as copilots and strategists to their peers, helping to create a new future based on strong leadership and winning business models.
On top of these expanding tasks and responsibilities, the pressure to drive efficiency in finance is growing tremendously. According to SAP performance benchmarks, today’s best finance and performance-management organizations operate at less than 50% of the average cost base (i.e., finance costs as percent of revenue). At the same time, the number of involved finance full-time employees (FTEs) is 44% lower, while the speed of processes is higher. Examples include 26% less time to close books and a 37% reduction in cycle time to forecast.
But how do CFOs transform their organizations to deliver these performance improvements while expanding the roles and responsibilities of their teams?
The transformation of the finance function should focus on four areas:
- Standardize processes according to best practices
- Use shared services models and centers of excellence to improve the service delivery model
- Bring the finance team from the back office to become real partners to the business
- Renovate the finance technological base with data standards and integration of the information systems
To get started on their journey, finance organizations should build a digital roadmap by focusing on two areas:
- Finance process landscape: reimagine processes and improve efficiency by leveraging the latest technologies.
- Future business and finance model: reinvent the overall finance model by using tools such as design thinking.
In the coming years, enterprise control will significantly change due to new customer expectations and disruptive technologies now available. Finance professional are empowered to be much more proactive and focus like never before on new market growth opportunities. The trends are easily predictable:
- Scenario modeling and simulation will play a much bigger role, due to the platform effects sustained by the business networks.
- Companies will drive to seamless and touchless business processes, such as real-time cash and working capital visibility.
- A requirement for instant insights and full transparency will force dynamic planning and modeling to assist leaders in their decision making.
Now is the time for CFOs to step up and play a major role in guiding their company through the digitization journey. An important initial step will be setting up a digital agenda and roadmap. So don’t wait – and enjoy the ride!
CFO Research surveyed 1,500+ finance professionals to find out how their careers are changing in the digital economy. Read the research Thriving in the Digital Economy: The Innovative Finance Function to discover nine trends shaping the future of financial management.