Don't Just Report History - Write IT
The wave of digital transformation has upended the traditional rules of the workplace and business for both start-ups and established enterprises alike. Due to technological disruption, the average lifespan of organizations has been impacted significantly. In the 1960s, the average lifespan of a company was 33 years and by the year 2027, it is forecasted to be only 12 years. Additionally, there has been a visible shift in the enterprise value graph from tangible assets (such as real estate, equipment, and inventories) to intangible assets (data and software).
The evolving business realities of today have presented an urgent need for CFOs to recondition themselves and convert the finance function into a true partner of the business. Till today, CFOs were largely focused on financial reporting administration, compliance and controls. Their roles were restricted to preparation of financial statements, separate reporting on the operating effectiveness of internal controls, enhanced disclosure requirements, etc. All these manual reporting hours took away the CFO's energy and time which could be devoted to more strategic and value-driven work. With the arrival of new-age technology, CFOs can concentrate on steering the business to the right direction. They must turn into valuable craftsmen by adjusting to this new, turbulent environment. In order to do the same, embracing new advances and utilizing data in the right manner is a prerequisite.
This transformation has not been easy for most finance functions. Much of this struggle arises from the need for CFOs to develop new skills themselves and within their teams. Only 10 percent of 700 recently surveyed senior finance leaders said their finance teams have the skills they need to support the organization’s digital ambitions.
Considering the traditional skills of our finance structure which supports a medieval view and focuses on verification and control, the struggles of today’s CFOs is understandable. While regulatory and compliance is still an important aspect of the modern-day CFOs role, they constitute only a part of it.
New Opportunities And New Challenges
New business realities have made the need for reliable and faster insights from CFOs. However, shackled by legacy technology and lack of knowledge about them, have led to CFOs not being able to take up new responsibilities. CFOs are facing pressure from both sides as they cannot draw exhaustive data from old systems and cannot make a business case to replace legacy systems with new cloud applications.
So, what is the way out? Do CFOs need to become technology experts as well? The answer is ‘no’. All they need to do is to understand the impact and consequences of adoption vs non-adoption of modern technologies. They need to master “the art of the possible”, to understand the value addition done by digitalization.
New business realities have made the need for reliable and faster insights from CFOs
Automation Comes To Rescue
CFOs will never be able to focus on developing new skills if they don’t have time, and for most, governance duties crowd their schedules. Making sure every report is in its place, especially with old applications, is incredibly time-consuming. Today most CFOs feel that core financial aspects like compliance and control take up a significantly large chunk of their time.
Automation is the answer to this challenge, which creates the bandwidth and capabilities needed by the finance function to perform at a larger role. Cloud-based finance applications like ERP Cloud, have tremendous power to automate time-consuming data gathering, reconciling, matching, and other tasks. When supplemented with built-in machine learning, these applications can automate finance processes with minimal human intervention. This frees up the finance team to focus on providing high value, strategic guidance that business demands.
Automation also is key to providing forward-looking business guidance because it enables the integration of large sets of data financial and non-financial —that are needed for comprehensive predictive analysis.
For example, CFOs can leverage strategic modeling solutions that combines a set of rich financial forecasting and modeling features and build scenario analysis and modeling capabilities. CFOs can drive course corrections by re-setting targets, evaluating financial impact analysis, and present focused financial information for informed decision making.
Create History - Not Report IT
Once CFOs have complete clarity on digital possibilities, opportunities, customers’ needs and modern finance applications, they will have the knowledge and tools for providing strategic guidance and influence future direction. They can be truly partnered with their counterparts within the organization and drive it towards achieving their collective goals. Traditionally, CFOs most often come into picture when the action is over to report about it. However, with the right skills and technology, CFOs can contribute in developing the narrative rather than just reporting it afterwards.