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