Organizations that are likely to become the leaders of tomorrow or those that desire to lead will rely heavily on harnessing information for better business decisions. In this scenario, one enabling role that will undergo a massive change is that of the CFO.
As technology evolves and becomes mainstream, it will change the way businesses operate. Regardless of what the next technology wave brings, transformation of the finance function is a foregone conclusion. In the early phase, data availability across functions within an organization led to greater transparency and efficiency for the CFO and the finance function. The next phase will entail gathering and performing sophisticated analysis of large volumes of data in real time. This will enable CFOs to predict business trends accurately and suggest the best course of action, thereby truly acting as the strategic arm of an organization. This will also put them in the right position to provide insights that help the organization accurately predict and quickly respond to
Some of the technological developments of today that are designing tomorrow’s organization are:
- Rapidly evolving Business Intelligence (BI) and analytics: Technology tools have made decision-making not only more accurate but also faster, thereby bringing agility to the business.
- Seamless information flow: Seamless information flow will go beyond the basics to aggregate information from secondary data sources such as banks, financial institutions, market research, trade reports, and credit rating agencies. This will empower users by providing them access to relevant data collected from multiple live sources, not just disconnected data that does not accurately or amply reflect reality.
- Increased adoption of social media: Social media can be used to build collaborative enterprises that leverage resources and pervasive data effectively across functions and locations. This enables CFOs to easily form end-to-end views of issues, as well as garner cross-functional efforts to address them.
Three things CFOs can do to gear up for tomorrow:
- Predict and plan effectively
Businesses will expect the CFO’s office to predict outcomes accurately and take preventive actions to mitigate risks. Predictive analytics is becoming important to every function of the organization.
- What is the likelihood of collecting on receivables?
- What is the trend for payables?
- What changes in interest rates can be expected?
- How much increase in sales can be expected due to an ongoing marketing campaign
Predictive analytics will help organizations become more intuitive through ongoing analysis and study of data and trends. CFOs will no longer be evaluated by their ability to present ‘what is’, but rather by their ability to predict potential challenges or opportunities and develop a strategy to mitigate or leverage them accordingly.
- Break functional silos
Gaining a strong understanding of each function will be required in order to become a true business partner. The finance team will need to step outside functional silos and understand the larger business picture as well as the business processes involved. They will be expected to evaluate conversion ratios and returns on investment (RoI) from campaigns, and contribute to decisions such as which marketing campaigns to run or which media to be targeted.
- Improve collaboration with the CIO
IT and finance functions are inextricably interlinked. CFOs will be required to champion various IT initiatives while keeping in mind the trends, the RoI of the initiatives, and their necessity to the business. CIOs, on the other hand, need to understand how emerging technologies can make finance more effective. They need to develop and implement better systems to support finance, and improve management of business risks and bridging of process gaps. In this scenario, it becomes imperative that the CIO and the CFO work closely to help the organization achieve its strategic objectives.
Read on to find out how CFOs can take real-time decisions in achieving their business objectives by leveraging on technology.