Let’s pretend we all know what digitalization means. But do we actually know how it is impacting our work, how it transforms the traditional job roles, sets new skillset requirements and demands us to educate ourselves to keep up with the Joneses? CFO 4.0 is our view of how digitalization transforms the CFO function in the near future and what you need to know about it.
The changing role of the CFO function keeps puzzling both customers and consultants. CFOs wonder what technologies to use to speed up processes and what the role of IT is in this digital transformation from CFO function’s point of view? Can a CFO, a finance professional, also be an expert of each technology and know the most relevant technologies to implement? Well, they don’t have to be. But they do have to understand how digitalization impacts their strategy. Digitalization represents both threats and opportunities for strategy formulation, while at the same time enabling execution. Digitalization is shaking up the CFO function and CFOs must be prepared to manage it.
In this CFO 4.0 blog series we will scratch the surface of some of these topics, that we have confronted in the customer interface. Further analysis can be found from our soon to be published whitepaper “CFO 4.0 – Digital transformation in the financial function”. The core of our blog series and whitepaper is a CFO 4.0 survey conducted in the end of 2018 in Finland. The survey gauged the opinion of Finnish CFOs and other senior finance officers with a goal to gain insights of how CFOs are coping with digital transformation. We found out, that the average digital maturity level in Finnish CFO functions was only 5.15, 10 being the perceived ideal state. Furthermore, less than half were confident that their CFO function has proper capabilities and readiness to respond to digital trends. An unwillingness to look at the details of digitalization will most likely increase the discrepancy between current and ideal CFO function.
Time to take digitalization as a part of your CFO strategy
CFOs have nevertheless picked up on the potential of all-things digital; some focus on improving process efficiencies whereas others have had the courage to experiment with new technologies like machine learning and AI. In fact, many of these technologies have turned out to be helpful in supporting manual daily tasks instead of actually replacing workforce. However, we don’t think that companies are tapping into the full potential: our survey showed that digitalization is rarely seen as an important factor on a strategic level and companies have been indecisive about the rightful owner for digitalization initiatives. Too many priorities, lack of clear vision and insufficient change management were highlighted as the most significant threats for success in digital transformation by CFOs. Multifunctional teams and horizontally integrated operations should learn how to coordinate and co-operate in order to succeed in the time of transformation, because digitalization is affecting all parts of the company. It cannot be solely outsourced to any specific department like IT. As business environments become increasingly dynamic and uncertain, organizations should focus on developing a more experimental and people-centric culture. This provides a holistic view of their clients and an ability to seize opportunities faster.
An unwillingness to look at the details of digitalization will most likely increase the discrepancy between current and ideal CFO function
Technology is the only key element of digitalization? Think again!
Digitalization can be divided into five key elements which, together, build the digital foundation:
- Strategy
- Organization
- People
- Technology
- Data
They all play an equally important role in the foundation and success of digital transformations and none of them should be overlooked. Digitalization is never a technology-only exercise that can be solved with 1 kilogram of processing power and two tablespoons of AI. Equally importantly, we must factor in the capabilities of our people, the culture in the workplace, our data assets, organizational readiness and our strategic objectives, just to mention a few. Each of these foundation elements will be discussed later in the blog series as well as in our whitepaper in more detail to give a thorough understanding about the relevance and impacts from the CFO function’s point of view.
As digitalization changes the world, we must change with it. Our CFO 4.0 concept provides tools and frameworks for conducting the digital transformation in the CFO function, evading the most common stumbling blocks. Stay with us to learn more!
Authors
Riku Lamberg, Business Consultant
Suvi Talja, Business Consultant
Otto-Oskari Lamminpää, Business Consultant
Neea Salonen, Intern
Jonathan Rehn, Intern