Today, an estimated two to five percent of global commerce takes place online. However, for many businesses, embracing the increasingly digital nature of business has been far more easily said than done. Businesses outside of the tech sector are often burdened with legacy systems and outdated methods of information processing.
This results in a direct and measurable loss in efficiency, which is felt perhaps most clearly within the finance function. There has been a great deal of focus lately on the CFO’s transformation from bean counter to business leader, and the necessity for CFOs to wear a variety of hats. However, it is essential to recognise that the foundation of a CFO’s role has always been finance.
While CFOs are no longer only number crunchers, they are still very much expected to crunch the numbers as part of their increasingly eclectic mix of duties. Outdated financial reporting systems and processes are a hindrance to the execution of this basic and most essential aspect of the CFO role.
If for no other reason than this one, CFOs need to be able to drive technological transformation within their businesses and push for the implementation of cutting-edge, efficient solutions.
This can occasionally spiral out of control, with businesses investing in a variety of technology solutions that may ultimately have overlapping purposes, be focused on a tangential area of business or quickly become redundant. Therefore, the CFO needs to not merely encourage the adoption of technology, but ensure that this adoption is strategic, measured, and aligned with long-term business objectives.
CFOs should champion tech investment not only to answer a specific need within the business, but also to answer the question “How can this particular solution help us achieve the strategic goals we’ve set out over the near term?”
And if the answer is a clear-cut “It can’t”, then the investment needs to be reconsidered. Technology should be adopted only to serve strategy – it is in no way a substitute for strategy.
The key performance metric for new technology within an organisation is its ability to support the running of the business on a day-to-day level. Being an early adopter of technology, particularly as a CFO, is not a matter of pushing for the adoption of a trend or responding to market sentiment. Investing in, say, blockchain or IoT shouldn’t be a matter of chasing buzzwords, but the result of weighing the available options and deciding that the investment serves the strategic needs of the business.