Our resident digital finance experts Mark Cracknell and Chris Argent answer more of your questions.
How can CFOs create more value?
Chris: The remit of the CFO is growing. And highlighting one particular thing that they could do is digital transformation, which is highly valuable and a priority task, but it’s worth acknowledging first of all that the CFO has a lot on their plate. How can so how can you add value? Well, what is valuable to an organisation? Is it growth? Is it more customers? Is it better funnel measure reporting, is it more automation and less headcount? Value is sort of such a sort of specific thing to each organisation.
If we’re talking about digital transformation, I think they need to understand what’s possible first, so that they can decide whether take that journey or not it. the moment, people don’t know what they don’t know. It’s difficult for CFOs because we’re not digital natives. Most people who are in leadership positions at the moment weren’t born with the internet. So they have a very different sort of appetite for this stuff, compared to Gen Z, who think we should automate everything.
Mark: Understanding the art of the possible is important as you say, Chris, but they don’t necessarily have to do that themselves. They’ve got to be prepared to delegate and trust someone to that task. Someone senior in their team who can drive it for them. So they’ve got to learn to trust and delegate as well. As a lot of CFOs aren’t great at that.
The other area that came up during the crisis was that ability to assess risk because an awful lot suddenly occurred at that point in time and the leadership was looking to the CFO to be that person who was questioning stuff, assessing risk for them, and reassessing risk.
Chris: That’s a good point actually. There’s such a focus on the commercial judgment of a CFO at the moment, and being that safe pair of hands is priceless. To make sure the company survives is obviously valuable, which is a link to the technology as well, because scenario planning is not necessarily being done very well, at the moment in finance.
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How do you bring your people with you during transformation?
Mark: First of all, you’ve got to be honest with yourself and everyone else: there are going to be casualties along the way. That’s the reality. You have to be open about that stuff. The phrase I used when I was working in Ireland, was ‘empowerment and transparency’. You’ve got to be transparent with people about the journey you’re going on, so they’re able to understand what the opportunities are for them to upskill in the new environment. The people who you really want are those that are willing to go away and self-develop and take on those roles. There will be people who will just say: ‘well, it’s not for me’.
Chris: I take a slightly more optimistic view of it. I don’t disagree with what you’re saying, but we have strong a set of skills in finance that allow us to adapt. If you’re numerate, there are other jobs there for sure. If you brought in a better tool, you could reduce your headcount by a couple of people. Those people may be lost, but they may be redeployed to other jobs. Research is showing generally that while there’s a shift in the market, overall, the job numbers are still there, even with all this automation and change. Right now, people don’t understand the opportunity of technology. They’re just know something’s coming, and they feel really uncomfortable about it. If you can help someone become, say, a better data modeller or become more proficient at a particular automation or planning tool, you take away that fear and gain some vital new skills for your team. We need to help people get comfortable with the problem, rather than just worrying about it.
What are big companies doing already when it comes to digital finance
Mark: A lot of them are doing what I say is the wrong thing, which is going straight to big consultancies.
Chris: A lot of them are asking for a strategy; they acknowledge they need a plan. So they’re approaching strategic consultancies. The majority are at that stage; they’re either starting and in need of a plan, or they’ve got one or two initiatives that they’re trying to run, but it wouldn’t be considered as part of a sort of bigger plan.
I think the more mature companies, such as Vodafone, are investing in data analytics. Specifically, they would be investing in automation and creating Centres of Excellence, but these are big enterprise companies. Then you have performance management and CPM tools. They’ve been there forever, but they’re getting bigger and better.
Mark: It’s difficult to say exactly what the companies are doing at the moment; it differs from one company to the next. Some are quite advanced in their thinking, some are incredibly baffled about their next steps.
Chris: A lot of companies at the moment have acknowledged that they don’t have the right skillset, which I think is quite an admission for a finance team or FD on a team. They’re seeking external support for financial modelling. You know, we didn’t see this pandemic coming, but I don’t think that scenario should ever happen. We should have the skillset in finance to plan and model around whatever the business is doing.
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