As a CFO you’re probably running into an unfamiliar word cropping up in many high-level conversations… ‘digitisation’.
It’s a concept that even some of the more tech-savvy audiences can struggle to understand, so for those starting from scratch it can be even trickier.
We see these as three of the main reasons why a company would want to digitise:
- Efficiency and cost savings
- To create change and greater choice both internally and externally
- Increased flexibility, making a business more adaptable to the market
With this in mind, you can clearly see why a CFO is central to the success of any digitisation project.
But as with any new pursuits, it can be tempting to burn through capital while chasing the promises digitisation holds. This is why it’s vitally important making sure you can wrap your arms around the fundamentals, such as understanding technology platforms.
By doing this, it can allow the organisation more broadly to concentrate on the more important (and more difficult) elements of digitisation such as looking after people and processes.
For the CFO, it’s important to be able to understand this digitisation strategy, as it can influence an organisation’s cost structure. On top of this, being able to make the financial strategy work in tandem with technology, to ensure the business maintains its competitive advantage.
Here are five things a CFO should be thinking about when it comes to digitisation…
- A CFO needs to consider the predictability of cost, as well as investment ‘headroom’. This is about not over (or under) egging a solution or investment. Being able to be flexible in this respect is critical.
- Examine new cost models, the reduction in CapEx, but increase in OpEx and the balance of these. A change to finance is usually the first to impact businesses.
- Consider the impact of deploying business critical systems through a third party and relying upon them to represent their company compliance, security, and resilience.
- Understand the impact on short and long-term financial income.
- Recognise the impact to business efficiency during cloud and technology adoption.
How will the CFO’s role differ from other colleagues in the boardroom?
The traditional CFO role is evolving. By 2020 the traditional functions that CFO’s perform will be completed by cross-functional teams, according to Accenture.
Task automation means the CFO is able to combine with some CCO functions, making them more involved in operations. On top of this it can allow a business to focus more of their time around economic and government pressures. On top of this the likes of a CDO, or even a CMO may hold overall responsibility for digitalisation. This breeds a new era of collaboration across the whole range of skills and experiences in the C-Suite.
Ultimately, the new breed of CFO will be a significant driving force for business governance, policy and security, with a greater focus on focusing on the future such as where, when, and how to invest.
How best can they improve their understanding of this new world?
A good starting point is getting a grasp of the new service models, data protection implications, costs, and governance issues that cloud and digitisation invoke.
To do this, buddying up with your CIO is a great way of getting technology and finance aligned. The CIO will have a strategy around digitisation, so talk to them about how cloud will play a part in the longer term plan, as well how will they continue to provide service but reduce costs and capex.
It’s worth remembering the CIO is also experiencing a change in their own role, so getting closer together can be beneficial to both parties.
When getting into the nitty gritty, consider and compare your current investment and overhead costs for private on-premise infrastructure against to those of cloud.
In this rapidly changing (and increasingly digital) world, the CFO is clearly central to delivering digitisation.
Want to see how a change in finance model can help you digitise? Cisco Capital’s Open Pay consumption-based model reduces cost and can make your organisation more flexible.
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