Digitalisation must be a priority for CFOs
Date: October 2023
By: Kerryn Lee CA(SA), Head of Financial Operations at Tarsus on Demand
CFOs are uniquely positioned to become critical drivers of digital transformation. The digital revolution coupled with new business pressures resulting from the global pandemic have reshaped the role of the CFO in organisations of all sizes and across all sectors.
Where once the CFO’s primary focus was on reporting historical financial performance, the combined challenges of escalating logistics costs, supply chain bottlenecks, and spiralling costs of creating products and delivering services have made the ability to develop a forward-looking perspective is a must.
The CFO of the future must have the skills and capability to assist the CEO in not only executing the business strategy, but also rolling our digitalisation of the organisation.
Regardless of their role or function in the organisation, for CFOs and other non-IT executives digitalisation represents a silver bullet for the advancement of the profession. By leveraging technology, CFOs can improve their decision-making process, enhance efficiency, and increase transparency.
Reinventing the business model.
Digital transformation is about using technologies and processes to design new and better systems, developing a company-wide digital mindset and using the benefits gained to exploit new opportunities.
Digital transformation begins with migrating to the cloud – public, private, or hybrid – and streamlining business processes, organisational culture, and customer experience to overcome the challenges and embrace the opportunities presented by a constantly evolving world.
Security risks and concerns were once among the main reasons for slow cloud adoption. Now, cloud security is more trusted than ever, with research showing that 85% of IT leaders stating they feel secure (or more secure) with the cloud than on-premises infrastructure.
As more businesses migrate to the cloud and adopt centralised services, they are doing away with cumbersome and costly legacy hardware, software, and applications, and choosing access over ownership.
Here are two key reasons CFOs can’t afford to ignore the cloud anymore:
No capital expenditure: From SMEs to enterprises, businesses no longer need to invest millions in hardware and software when cloud-based platforms provide them with software as a service delivers applications over the Internet, removing the need for complex software and hardware management, while providing the security, scalability, and flexibility that modern organisations need.
With SaaS, technology updates are automatic, meaning that employees are always using the version of the software. This also means that the organisation remains compliant, while process automation frees workers from tedious, repetitive tasks.
SaaS is billed as a recurring monthly expense, a steady and predictable cost with no initial cost, and no need for sudden unexpected expenses when it’s time to upgrade or something breaks down. It’s a capex to opex mindset change.
No expensive data centres: Data centres are extremely costly to build and to run. The monthly SaaS subscription fee is based on consumption, allowing companies to pay for what they use. The advantage is that organisations can incorporate this cost into their budgets, as a predictable, recurring monthly expense.
Because there is no investment, there’s is no need to sweat IT assets and hold onto old technology that limits innovation. Also, companies that make the shift from owning to renting have no IT support costs because there is no need to employ staff with an outsourced IT infrastructure.
It’s for these reasons that the As-a-Service market is becoming a mindset as much as it is a business strategy,” concludes Lee.
A paradigm shift
Digital transformation can be disruptive. For accounting professionals, it requires a paradigm shift to a whole new way of working.
Because the evolution of accountancy and technology are interlinked, while technical and ethical skills will always be at the core of the CA(SA)’s role, embracing digital skills is increasingly essential to a career in finance. Digitalisation enables efficiencies that organisations need to continually innovate and remain competitive.
Strengthening the strategic role of CFOs
It is especially important when it comes to forecasting, enabling CFOs to leverage the power of digital to play a more strategic role in the business. A recent study reveals that 73 %of CFOs agree that digitalisation of the finance function is a high priority, although still in its infancy in many companies.
For CFOs, the study reports, transformation represents a great opportunity. One example is AI-supported forecast models and predictive data analysis, which can help to strengthen the strategic role of CFOs, helping them to anticipate challenges and providing companies with the data they need to stress test their business plans.
Through real-time online collaboration, workflows become more efficient, improving the CFO’s ability to serve the business and its clients. Ultimately, the true value of digitalisation lies in the value of data-based business management and a culture of data-driven decision making that can drive organisational growth.
The benefits of digitalisation are significant, and CFOs who embrace it will be better equipped to meet the challenges of the modern business world and drive growth and success.