What is a CFO's role in Digital Transformation?
Society as a whole has long since been evolving to incorporate technological innovation for everyday convenience – a phenomenon that everyone had to come to terms with when the 2020 Covid-19 pandemic caused a worldwide lockdown. It has become imperative for businesses to take advantage of digital opportunities to help keep them afloat and competitive in our highly digital age.
Digital transformation for companies has long been predicted to be a top driver for company spending, as it is indeed an investment. However, with more and more consumers opting to support companies who have adapted digitally, it might just be the best investment you'll make for your business.
During the height of the pandemic, existing business’ mode of service and product delivery came to a halt – businesses were either forced to cope and come up with ways to stay afloat during the pandemic or cease to exist. For businesses who adapted, one of the key decisions was turning their company digital.
What is the CFO’s role in all this?
Given how essential the roles of a CFO are, they should already be in a position to be a visionary, strategic thinker and leader for the business. Digital transformation presents a unique opportunity for the CFO to set the direction of the organization by investing in the right infrastructure and internal digital initiatives.
In an episode of the Inside the Strategy Room podcast, Kate Smaje, a senior partner at McKinsey, said that it’s the CFO who asks, “where growth will come from and how to think about it relative to previous years.”
Given their heavy involvement in financial reporting and analytics, CFOs understand how the company is performing, and so they would be the best person in the boardroom who can ensure that all digitization efforts are aligned and congruent to the company’s business goals.
In some cases, CFOs can also be catalysts for digital transformation when the need for a better business model arises. For example, Netflix's decision to shift from a physical video rental service to a completely virtual platform had been an important development that allowed them to evolve into the next generation of video sharing services. In determining which business model can be viable for a business, the CFO can work with their counterparts in strategy, marketing, and technology.
For businesses with digital or AI-enabled processes that have intensive computing requirements, shifting to cloud computing could be a viable option. In this case, it’s the CFO’s responsibility to help the chief information officer (CIO) to make a case for shifting to enterprise-level computing solutions and leveraging cloud-based technologies and services.
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This post was first published on 11 May 2020 and edited 19 May 2023. Edited by: Aly Tagamolila