How Can CFOs Pilot a Successful Digital Transformation Drive?

In a fast-paced economy and marketplace, where customer preferences and demand change rapidly, it is difficult for businesses to keep up if there isn’t a clear plan for digital transformation. Digital transformation can come about through digitalization: the application of advanced automation technologies to change processes and business models for the better. Going digital is easier said than done, especially for a company that is long established and ingrained in the traditional ways of working.

The path to digitalization and digital transformation can be as complex for a small company as it would for a large corporation. Firstly, there must be an outline of a tentative roadmap for why and how a company must plan out its digital transformation journey. Making the specific case for why a company needs to revamp its existing work processes and systems is critical to deciding how and when to deploy automation software. It is also important that all digitalization drives accommodate for plausible future business and market changes.

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Any Initiative Towards Digitalization & Digital Transformation Must Make Room for Future Disruptions

The digital transformation plan must be agile enough to take on sudden changes in market conditions or new market opportunities. A case in point is the COVID-19 pandemic where many businesses had to halt operations altogether due to the ongoing social restrictions and lockdown measures. Companies that already had flexible working models to accommodate for work-from-home or remote working fared better compared to those that didn’t. In fact, there was a sudden surge in investments in cloud computing and cloud-based business applications like cloud enterprise resource planning software at the onset of the pandemic as a way to continue mission critical business operations. Secondly, there is the need to allocate a good chunk of a company’s capital reserves and funding towards investment in new age technologies.

While future disruptions, be it economic, social, political, or innovative/technological disruptions like the one brought about by Amazon are difficult to predict, companies can certainly plan for reserves. Capital reserves planning helps companies create a little ‘breathing room’ to either react to a disruption more productively or spend on a new business model to tackle disruption. While digital technology is at the core of managing any form of disruption in today’s new corporate age, the decision-making, especially in times of great uncertainty, lies solely with the Chief Financial Officer (CFO).

The CFO, not the IT, must lead the charge on Digital Transformation

Investing in technology and planning a roadmap for digital transformation is no longer the sole responsibility of IT. Today, the initiative and strategic decision-making on the way forward for a company must come from the top: from the CFO.

Every company has a different trajectory for meeting specific goals and accomplishing key objectives. The path to digitalization, and hence digital transformation, too will be unique for each company. Reaching set objectives through digital transformation is as much a risk as is a strategic move. The decision to go ahead with a set digitalization plan must therefore be that of the CFO. CFOs are uniquely positioned to gauge the financial standing of their company as well as determine the next move in terms of future investments in new growth initiatives. Having a good understanding of a company’s finances will help determine how and when one can invest and lead the charge on digital transformation.

The CFO, not the IT, must lead the charge on Digital Transformation

There are a few things a CFO can do to get on track and onboard with digital transformation:

Define what digital transformation means for your company: including the processes, systems, sectors, and businesses that you hope will be impacted positively through digitalization.
Determine if a particular digitalization project will be transformative enough that it provides a new way of reaching the customer: there are several ways to service a customer and meet their expectations. True digital transformation is achieved if a certain digitalization drive; say the application of intelligent automation to a process, will help accelerate fulfillment and customer service.
Start small: digitalization is the path to digital transformation. One of the primary impediments to achieving true digital transformation is lack of capital reserves. A CFO must be able to decide the budget and investment needed to go digital. Rather than focus on an entire organization or sector, businesses can start small and think of automating processes or departmental functions. The advantage with cognitive technologies like AI and machine learning employed in today’s digital transformation solutions is that they drive seamless, straight-through process automation, with little to no human intervention. By transforming individual processes in stages, businesses will be able to save a lot on operating and manpower costs. This will help build revenues and a budget for bigger digitization initiatives. Also, compatibility is another factor that must be taken into account when deploying new software. A small digitalization drive will help companies understand how they can proceed with bigger projects.
Revisiting workforce needs: this seems like the job of a HR manager, but it must be noted that a change in departmental procedures or processes may impact existing staff positively or negatively. CFOs must take into account the spending on new staff or retraining of existing ones, which will be inevitable in case the company decides to deploy new automation software that requires a good deal of learning. Upskilling, reskilling, or dispensing with unskilled workers is as much an exercise in finance management as is human resource.
Revisiting budgetary & IT targets: it is important to set a timeline, both short-term and long-term, of the returns, transformation, and changes a company expects to see and if they are indeed seeing them. Revisiting ongoing projects to determine whether a company is on track with its investments, spending, and targets to be achieved is essential to it reaching its digital transformation goals.