CFOs Leading Growth Part II: The Velocity of Digital is Accelerating

The CFO Leading Growth series was inspired by a recent US Banks survey, Leading the Return to Growth*.?

In our last newsletter we concluded part I of this series, Growth with Offense and Defense , with,

As CFOs continue to navigate the complex balance between cost control, growth, and risk management, the insights from the US Bank report emphasize that their roles are evolving beyond traditional finance functions. By adopting lean practices, optimizing pricing strategies, and enhancing supply chain efficiency, finance leaders can significantly impact their organizations’ growth trajectories.?

Part II deals with how these new and growing responsibilities will be successfully accomplished by finance leaders – through the acceleration of digital transformation.?

Digital transformation is about to take off

Here is part of US Bank's summarized survey results:?

Finance leaders admit there’s been limited progress on digital transformation in the past 12 months.?? But that could change soon: 34% are exploring emerging technologies, up from 27% in 2023. And they might find that implementation of new technologies is becoming easier: only 29% say that reluctance and resistance to change is a major transformation barrier, compared with 40% last year.

There is now nearly universal recognition by finance leaders that technology is a key building block in making our teams more valuable, our processes more effective and our business impact more meaningful.? This shift is expanding the CFO’s role from traditional tasks to broader strategic leadership that involves data-driven decision-making and predictive analytics (McKinsey & Company ).

The role of the CFO and their advisors in digital transformation is made up of numerous steps, including,

1. Preparing a digital growth strategy
2. Determining where the resources for our digital strategy should be applied
3. Streamlining and simplifying work processes
4. Sorting through the growing choices and choosing the technology that is the best fit
5. Implementing the chosen technology

Don't feel overwhelmed. Here are some resources to get you off to a great start.

Preparing a digital growth strategy

Kenneth Fick 's series starting with, 5 Financial Indicators Your Company May Need A Finance Transformation highlights some behaviors and triggers that indicate your department may be in need of a Finance Transformation.? ?He combines these qualitative factors with 5 metrics…

• Rapid Growth of Finance Function Expenses
• Financial Forecast Cycle Time
• Annual Budget Cycle Times
• Monthly Close Cycle Time
• Finance FTEs Per Set $ of Revenue

…? to help you benchmark where your finance department is on the digital maturity scale.?

In Navigating the Digital Transformation: A CFO’s Guide to Data Analytics and AI Nathan Bell describes how going digital uncovers insights previously undiscoverable and? enhances decision making; but also highlights some of the barriers to making this shift.?? He closes with 5 practical steps CFOs should be taking to embark on or accelerate their digital transformation journey.?

For CFOs, the shift to digital is not just about adopting new technologies but about transforming their roles to meet evolving business, regulatory, and market requirements. – Nathan Bell

Determining where the resources for our digital strategy should be applied

In his article, Why Finance Transformation Should Start With a Fast and Efficient Financial Close , Christopher Argent argues that the financial close is the best place to start your finance transformation.? He cites efficiency gains, visible benefits and having control over the full process as why starting with the close has a high probability of success.??

Given the CFOs control over this domain and the impact improvements in the close can make to the business this is a great place to gain your footing.

Our technology investments, like all deployments of significant capital, deserve return scrutiny that comes natural to CFOs and their teams. Given this fit, tech investment proposals should come with an ROI attached. If this discipline isn't in your capital allocation process today here are some tools to help you add this capability.

The Capital Investment Analysis Request Form is ideal for evaluating the merits of any capital project, including technology investments. In addition to being easy to fit into your specific capital spending policies it standardizes investment analysis so the same financial hurdles are measured for each project.

ROI Calculation for AI Projects is used to summarize the Financial Benefits and Costs and calculate the Cash on Cash ROI for AI or tech projects being considered in your business.

Streamlining and simplifying work processes

Successfully growing your digital presence requires that you digitize processes that are delivering value. ?For example, most of us practice taking our car into the shop for a tune up before a catastrophic engine failure occurs.?? The same concept can be adopted for your processes.? They need a tune up before you take a deep dive into transforming your operations.? Transforming a wasteful process just leads to a transformed wasteful process.??? ??

So, the first step in getting your future right, is to go old school by applying some type of redesign ?to your most critical processes.??

If you have been through a work simplification process, you know it isn’t simple.?? But it doesn’t have to be hard.?? With the rights goals, the expertise of your team and a methodical approach you can tune up - even overhaul - old processes that have accumulated grease, grime and serious leaks in the form of bad habits, extra steps and worn out practices. Ie. You can position yourself for a successful transformation.

Here is an article that can help you through to process,? Your Guide to Financial Process Redesign , ?and a Tool to ease the burden, ?Process Redesign Workbook. ?

Sorting through the growing choices and choosing the technology that is the best fit

Here are some good places to start on choosing the best technology fit. With the myriad of new products coming to market this is becoming a more demanding decision for CFOs.

Raghavendra Reddy (RR) shares ?the benefits of selecting the rights choice for the right process in his article, The CFO Tech Stack: How To Build Your Modern Software Rack.? He also lists 8 factors to consider when choosing your tools and 4 helpful tips.?

“ …building the modern CFO tech stack is an exciting journey filled with potential. By carefully selecting tools aligned with your needs and considering factors, you can create a powerful tech stack.? - Raghava Reddy. “

Our panel discussion, The CFO Tech Stack, at the FinEx Summit is another excellent place to gain insights into building the right foundation for your digital expansion.?? Brad Eisenhuth , Zeeshan Umer joined Steve Rosvold on the panel.?

Take in the panel discussion ?here, The CFO Tech Stack.

In summary, the panel emphasizes the CFO's critical role in assessing and connecting different technologies within the organization. They stress the importance of aligning the technology stack with business and finance strategies, digitization goals, and financial automation objectives. It is crucial for the CFO to have a holistic view of resource allocation and prioritize investments that drive value and they urge CFOs to challenge their technology teams and prioritize stability, sustainability, and agility in technology investments.

Implementing the chosen technology

No lessons on tech implementation would be complete without taking in Andrew Lee ’s, CFO Ed Talk, System Implementations Can Be Successful.

It’s short, to the point and lesson filled.

Andrew summarizes his recipe for a ?successful system install as follows,

"Organize, use a software to help create an accountability structure, hold the team accountable, and don't just call them to task, but be willing to jump in and help. – Andrew Lee "

Peter Adams ' teaching in The Secret to Successful ERP Implementations is Not Putting the Cart Before the Horse had broad applications for many technology implementations.? In this article Peter lists 5 ways to optimize the ROI on your technology installations.?

His Final Word in the article includes this,

… the two most common traps associated with ineffective ERP systems implementation initiatives are: a) moving to implement an ERP without understanding and considering the needs of the entire business, not just Accounting, and b) automating (bad) processes before they have been fixed and optimized.? – Peter Adams

Conclusion - Part II

As CFOs take on the challenge of leading digital transformation, their role is expanding beyond traditional finance into broader strategic leadership. By developing a well-thought-out digital growth strategy, streamlining work processes, and carefully selecting the right technologies, finance leaders can unlock new levels of efficiency and insight. The journey requires a methodical approach, but the potential benefits in terms of data-driven decision-making and enhanced business impact are substantial. With the right tools, resources, and mindset, CFOs can position their organizations for sustainable growth in a digital-first world.

CFO.University is committed to equipping these leaders with the tools and resources necessary to excel in this shifting landscape, providing practical insights on both offensive and defensive strategies.

* US Bank CFO Report, Leading the Return to Growth

Post Script

Thank you for subscribing to the Future of Finance Leadership. The objective of the newsletter is to help you grow professionally by making you, your team & your business better. To the extent it is doing that, please share it liberally. To the extent it is not, please let me know. ????????

All the Best,

Steve Rosvold

Chief Learning Officer, CFO.University

CFO.University is a convenient, practical and performance enhancing development platform for CFO's, FDs, accounting, finance and treasury leaders.

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