Part of the “Digital Finance Transformation” series that provides a framework for CFOs to move forward confidently on the journey toward digital transformation
With digital transformation, the role of the CFO has evolved from straightforward operational leadership into the strategic guidance of the overall direction a business should strive for. However, what are the actual benefits of the digital transformation for the CFO?
Why should CFOs care?
Directly or indirectly, CFOs will become involved with digital transformation. In the first place, digital transformation is connected to costs, effectiveness, and technological advances. Financial leaders can drive the following benefits by being actively engaged in their enterprise’s digital journey:
Improved financial processes
According to the Oxford Economics Survey “How Finance Leadership Pays Off,” 73% of the surveyed financial leaders believe that automation is improving efficiency. With the aid of today’s digital tools, CFOs can easily automate all manual processes that are time-consuming and costly. Robotic process automation (RPA) is a cornerstone for the optimization of financial services. RPA accelerates digital transformation of business processes by automatically replicating tedious actions that have no added value. Cloud-based mechanisms merge multiple systems and architectures and bring forward one unified platform for the performance of operational tasks. Artificial intelligence (AI) enhances and brings depth to processes and removes irrelevant complexity. Highly automated and standardized processes result in high performance and process efficiencies that can be reached only by the application of digital tools.
Boost in analytical capabilities
Predictive analytics and machine learning unveil the power of data, one of the main assets an enterprise owns today. Big Data can be processed at a completely new level than before, providing real-time insight into the actual business situation. Traditional planning and forecasting activities are being overruled by new functions and algorithms. CFOs have the tremendous possibility to convert standard analytics into an outstanding asset that is worked on and accessed in real time by the financial team, as well as by management.
Enhanced decision-making and delivered value
Due to the above-mentioned enhanced analytical capabilities with modern digital trends, the entire enterprise can rely on powerful insights extracted from its data. The ability of an enterprise to react and act is tremendously improved: decisions can be made in a shorter time and more effectively due to precise data analysis. With this, the CFO is the key person vested with the power to disclose the “legend” behind financial numbers and evaluate the impact of all business transactions and opportunities. This is one of the key aspects showing that, with digitalization, the CFO’s role is being magnified.
Minimization of costs is one of a CFO’s key responsibilities. By automating and harmonizing financial processes, a large amount of manual work is diminished, which results in visible cost savings. Automation, on the other hand, ensures that tasks are carried out continuously. Moving away from traditional on-premises solutions to the cloud could likewise result in decreased capital expenditure, on-site servers, and so on. In the long term, all these enhancements in the area of process improvement will result in lower overall costs.
Lowered risk and error rate
Machine learning (ML) technologies can deliver greater value from core processes, such as cash management. ML automatically “learns” from historical data, creates its own logic, and helps reduce potential errors. In the same way, compliance processes, so crucial for finance, will also be error-free. With the application of the latest technologies to crucial financial processes, CFOs are directly minimizing risks, primarily related to the human factor.
Agility and scalability
Due to the insights-driven nature of automated processes, CFOs can ensure the entire organization’s timely and effective response to any possible business challenge or disruption. Further, the digital infrastructure will enable the finance department to scale its operations based on business needs and growth.
It is apparent that digital transformation is not only a goal for an enterprise that would like to gain competitive advantage; it is also a key subject on any CFO’s agenda. It entails exceptional benefits for the position of the CFO, vesting unique power in their hands and marking a new era of their role in the enterprise.
Download the Oxford Economics Survey “How Finance Leadership Pays Off” to find out why some CFOs are more successful than others.