April 27, 2020
Charged with maintaining the financial well-being of their organisations, CFOs have traditionally had a wide remit that required touching on many business areas. This remit is expanding, however.
A McKinsey survey found that in 2018 CFOs received direct reports from 50% more functional areas compared to the same survey taken in 2016.
This McKinsey survey’s finding suggests that CFOs are getting more closely involved in digitisation efforts, with innovative finance functions increasingly benefiting from technological solutions. Nonetheless, today’s leading technologies are penetrating the finance functions of organisations at a relatively slow pace.
Clearly, CFOs are noticing the potential of financial innovation to help perform their expanding roles. 66% of senior finance staff proceeded with a refined digitalisation strategy in 2018, compared to 51% in 2017, according to a Deloitte survey. But which technologies hold the most potential? We think CFOs should get up to speed in the following four areas.
Cloud adoption is an enterprise-wide phenomenon, and finance departments must be open to the benefits of moving financial functions to cloud-based solutions. Whether public, private or hybrid cloud the flexibility and agility gained by operating free of traditional computing restrictions are beneficial to a CFO’s responsibilities too.
By moving budgeting and planning functions to cloud-based solutions CFOs can enjoy cutting-edge software without waiting for update cycles. Cloud-based finance software also better integrates with other enterprise systems including ERP and CRM, bringing the finance function closer to everyday business operations.
Finance departments can benefit from both deeper insight into the abundance of financial data large companies generate, and from improved ways of interpreting the results. Gathering more usable knowledge from existing data fits in with finance’s growing role.
For example, dynamic dashboards can tap into rich financial data sources to deliver almost real-time updates that reflect the performance of a sprawling enterprise. Smarter use of financial data can lead to better decisions and CFOs should explore ways to unlock the hidden value of their data with cutting-edge data analytics.
The enterprise finance function is often highly transactional and consists of many repetitive business processes. Automating these processes one can free up staff to engage with higher level activities while reducing the risk of errors and increasing quality at the same time.
Robotic process automation (RPA) does not involve the same top-level process redesign and computing challenges as AI and machine learning and can thus deliver quicker wins. Instead, RPA simply speeds up the existing processes that currently eat into the energy and resources of finance staff.
CFOs should look beyond cryptocurrencies and consider the valuable, real-world applications of blockchain. With proven applications in highly regulated industries including finance, blockchain can help CFOs create more secure, more transparent transaction environments.
Blockchain can open up ways of working that was previously technically hard to achieve. With tokenization, for example, finance teams can lower the cost of financial processes and enhance the efficiency of internal and external financial transactions.
With an ever-widening remit, CFOs should lean on technology to introduce the efficiency that can help financial professionals apply their highly trained skill sets to broader business issues.
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