Going into 2022, a CFO’s job will revolve around digital transformation.
In fact, according to a recent study by Deloitte, the majority of finance professionals believe they are expected to transform their company into a data-driven organisation.
Heading into 2022, this trend will only continue growing stronger.
To stay ahead of the curve, check out these 10 digital must-dos for Chief Financial Officers in Q4 of 2021!
1. Strategy development and setting
CFOs must begin to effectively align digital strategies and business outcomes, even as circumstances change.
It is important for CFOs to set out a clear digital strategy that is tied to business outcomes and provides guidance on the scope, scale, and sequencing of initiatives. Digitalisation should be a key driver of revenue growth and cost reduction.
CFOs need to understand how technology can support new business models or expand existing lines of business. This will be key to refining investment priorities.
According to Gartner, “64% of business leaders say they will use COVID-19 and related economic crises as an opportunity to focus on redesigning their businesses. 69% say digitalisation initiatives are accelerating.”
2. Transformational planning and budgeting optimisation
First, make sure your company’s priorities are clear and that the budget is adjusted to support them – which may necessitate tightly controlled budgets and putting in place mechanisms to reshape priorities.
Secondly, consider contingency budgeting, even if only for certain cost categories in different scenarios.
The budgeting process is in a state of transformation due to the opportunities and/or challenges the digital world has brought about (depending on your disposition and situation).
For example, they might consider basing budgets on expected returns, which are explicit about how much customers are worth over the lifetime of their relationships with the company.
When planning is more iterative and incremental, planning periods start to shorten, allowing for faster reaction times.
3. Management of performance
The increase in digital transformation has led to a variety of investment opportunities that organisations can undertake. This expands the scope of conventional budgeting techniques.
Reduced profit margins and a rapidly changing business landscape have made ROI-based analysis of new digital initiatives difficult. This might cause opportunities to be overlooked prematurely.
Consider the possibility of measuring, financing, and managing digital business performance and expenditures in a new way – and then realise that there’s a high probability of a SaaS platform that can achieve your dreams with extreme efficiency.
4. Increased employee productivity
The future of finance requires the creation of a digital workplace that enables employees to participate in flexible working arrangements. This means management should invest in a hybrid work environment that enables employee performance to flourish.
Employees will need support to adapt to this environment. More effort will be needed on the part of an organisation to promote a new culture that is open and experimental, as well as being meritocratic and less bureaucratic.
And as remote work becomes more and more prevalent, organisations also need to find ways of keeping their remote workers happy with their work.
5. Allocation of costs
Organisations should focus their spending on areas that create differentiation or help build revenue-generating models. This includes IT, marketing, customer experience, big data and overall organisational transformation. This is especially important if your cost of resources is rising and margins are getting lower.
Companies must allocate their costs in accordance with where they create value – marketing, digital transformation and so on.
6. Waste reduction
Reduce the amount of time your team spends on manual finance processes that can be automated and invest that time in areas of value creation or opportunity spotting.
Finance departments will need to become leaner while senior management will need to become more flexible to accommodate soft benefits such as employee engagement initiatives to promote good well-being.
To support this, successfully implement zero-based budgeting and zero-basing processes to eliminate wasteful spending.
To reduce waste, CFOs should digitalise manual processes and restructure costs. Finance departments are also de-layering certain functions to reduce support requirements and improve productivity.
7. Technology investment
CFOs should prioritise investing in technology that enables the finance team to deliver value to the organisation.
Ensure the infrastructure is in place to carry this out. As the first port of call, you’ll need to create a roadmap that will enable a successful selection and implementation of the technology (Hint: join our ‘How-to Webinars’ to learn more). You’ll also want to make sure you get the most out of any technology demos.
Digital investment is needed to move away from a reactive, transactional approach towards proactive insights-driven operations.
There are two critical elements in the finance technology equation: first, companies need to decide what they want from their finance department, and then they must select the right tools to help them achieve it. This means not only thinking about the finance department’s needs but also considering other parts of the business that finance will need to work with.
For instance, powerful finance ERP software such as NetSuite lets finance gain control of their operations, so they can go from reporting in a siloed manner to truly understanding what is happening in the business on a unified platform.
8. Digital upskilling
Digital transformation is more than just digitising traditional processes. It requires investments in the people managing the processes.
Finance departments are becoming more digitally savvy. Organisations that invest in upskilling and hiring professionals with the necessary skills to navigate a business landscape that is becoming more digital will be the organisations that stand the test of time.
9. Data and analytics
CFOs need to deploy data and analytics (D&A) insights securely and at scale across the organisation. The finance function of the future is a more data-driven, agile business unit that supports decision making across the entire business.
CFOs need to prioritise data and analytics in order to make sense of the financial impact of emerging technologies. Finance teams will need capabilities, insights and expertise that can support business growth.
CFOs can use data and analytics to bridge the gap between finance and other lines of business. For instance, they can look at how the business is performing, what the future of their markets are, where competitive threats lie and how to stay ahead of them.
The Infor Q&A financial reporting software, for instance, automatically consolidates data from multiple systems to produce accurate reporting across all areas of the business – including IoT-generated data. The advantage is that businesses get the information they need to stay on top of their finances, while automatically complying with regulatory reporting standards.
10. Cloud adoption
One of the biggest disruptions in finance will be moving away from the traditional model of enterprise resource planning (ERP) software running on-premises. This is the accountant’s version of a brick-and-mortar store moving online.
Finance leaders must move to accelerate cloud adoption with right-size, right-choice vendor selections based on business needs and pain points.
Cloud ERP such as NetSuite gives finance the ability to collaborate with people across the entire organisation without having to worry about maintaining software and IT infrastructure.
There are many benefits to cloud computing, such as lower up-front costs, data security, anywhere/anytime access, scalability, and less maintenance. Cloud ERP is also more user-friendly, with intuitive interfaces and powerful analytics available in the cloud.
The advantage of moving from a traditional in-house finance system to cloud ERP is that you don’t suffer from the same drawbacks. For instance, cloud ERP makes it easier to conduct business across time zones because all data and files are in one central location.
It’s fair to say that the cloud is the future of financial management systems.
In conclusion, the finance department must keep pace with digital trends to become a truly agile business unit.
By adopting the necessary technologies and hiring the right talent, CFOs can ensure that finance remains capable of driving business growth.
The post-pandemic world presents new opportunities for businesses – but it’s down to the c-suite to seize them.