I read a Warren Buffett quote the other day: “Chains of habit are too light to be felt until they are too heavy to be broken.”
It struck a chord with me (not just because he’s one of the world’s most successful billionaires with great financial instinct), but because it’s also an accurate description of the dilemma many CFOs find themselves in today.
Industries are being disrupted, the balance of power has shifted to the customer, and business models are now synonymous with business outcomes. Everywhere we look, we see and feel change – in our customers, our competitors, and across our respective industries. It’s all the result of digitization, of course, with its roots in the cloud as the basic starting point.
I think many of us are stuck in our routines of habit. Aside from outdated perceptions around cloud security (see my previous blog “CFOs And The Clouded View of The Past”), CFOs with an exclusively on-premise mindset are exactly who Warren Buffett is referring to. We know change must happen. Rather than resisting it, I think the finance department can – and should – help lead it.
It’s something we’ve had to embrace ourselves at SAP. The shift to the cloud has meant we’ve had to adapt to the way we recognize and report revenue, structure commercial agreements, support customers, and deliver our products to market. It’s impacted just about every area of our business. And one of the reasons we’re succeeding is because finance is playing an instrumental role. I’d strongly advise you to consider doing the same with your own organization – if it’s not yet happened.
For example, finance has had to become an area of cloud insight and expertise at SAP so we can offer customers a choice – not just between on-premise, hybrid, and cloud landscapes, but also from a commercial perspective of OPEX versus CAPEX. That means bringing insight and proactively adding value to sales teams during commercial negotiations with customers. And it’s also redefined the relationships we have with customers. Cloud means recurrent revenue streams, which require sustainable, standardized delivery and satisfaction from a customer perspective. This makes renewals one of the main KPIs.
Our successful transition to the cloud is closely accompanied by finance at the forefront of cloud enablement. All our CFOs can be leaders in this regard. That’s why our finance teams have had to change internally to support how the business is changing. We are increasing the level of cloud and expertise in new business expertise in finance to reflect the different skill sets required to support sales.
You have a similar opportunity – and responsibility – in your own organization. Finance has both a challenge and a chance to rise to the occasion of this inevitable change. Even if you are not yet ready to start implementing a shift to the cloud, I’d strongly suggest you outline the areas that extended finance team members and related stakeholders, should be involved in and what that will require from your department (e.g., shared delivery, shared contracting, shared service center colleagues)? What different skill sets will you need in place? What will be the impact on your own OPEX/CAPEX and other KPIs, such as operating capital, working cash flow, ratios? How will your finance team access real-time information? Where they can best apply it? How will this change the way you engage with different parts of the business, and what processes will change (or disappear) as a result?
As the world changes around you, you will be expected not just to navigate your way through it, but rather to step up and lead. That will require a different set of skills and deliverables than you have today.
As I started this blog with a quote, I’ll also end it with one, this time with food for thought from Peter Drucker: “The greatest danger in times of turbulence is not the turbulence, it is to act with yesterday’s logic.”
You can find out more about the advantages of cloud technologies by registering for the upcoming SAP Webinar June 28: “Is it time for finance to embrace the cloud?”
This article originally appeared on CFO.com and is republished by permission.