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Increasing Role of a CFO in the Digital Age

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CFOs are taking a more active role in technology. They are the ones looking to cut expenses and generate more revenue, all things that can be done via technological innovation. But the CFO role is also evolving where they have to think more strategically and bring business units together.

Here are three things every CFO should be paying attention to.

The Consumerization Of IT

What the “consumerization of IT” means is that the more familiar employees get with user-friendly consumer tech products like Facebook or Dropbox, the more they expect their company’s tech to behave in the same way.

Of course, it rarely does, which leads to employee “pushback,” said Tim Herbert, senior vice president of research and market analysis for CompTIA.

Companies need to update their programs and apps so that they’re more consumer-friendly or let staff use their own programs for work purposes — in line with the bring-your-own-device movement, which many companies pushed back on before realizing it was more productive to allow staff to use the devices they were most comfortable with.

If employees aren’t allowed to use the latest tech or if company software isn’t sufficiently user-friendly, then staff could go rogue and adopt programs IT doesn’t endorse, Herbert said. Gartner has said that “shadow IT” often exceeds 30 percent of total IT spend.

Companies should be taking software suggestions from employees, said Herbert. CFOs can try out suggested solutions in smaller groups, he said. If a program works, a CFO can roll it out to the wider enterprise.

Your Trusted Machines And Predictive Analytics

Meanwhile, data analytics are becoming more important to companies, said Nigel Fenwick, a vice president and analyst at Forrester Research.

Analytics can help focus a CFO’s attention on a particular business problem. CFOs who can use data to gain insight into an issue are the ones who are using data right.

Naturally, every division head wants resources allocated to his or her department. Predictive analytics can help a CFO determine which area might get the best return on investment, according to a Financial Executives Research Foundation report.

Analytics can also help drive operational value, reduce costs and improve efficiencies.

On the consumer-facing side, analytics have created the “trusted machine” — an app, program or tech-related service that already knows what a customer wants. An example is Google Maps, which knows that, when Fenwick gets into his car in the morning, he’s going to his office. It gives him traffic information and tells him how long it will take to arrive.

The trusted machine trend is set to expand on a much larger scale, Fenwick said. As data collection and analytics become more powerful, companies will be able to fulfill consumer needs in advance.

“Your favorite coffee place might allow you to order a drink on their app, but you still have to select what you want,” Fenwick said. “Shouldn’t they already know if it’s the same thing you order every day?”

Within companies, these same trends will lead to smarter systems that help employees choose the best course of action. Analytics can help determine the ideal hire, what task someone needs to complete next or if someone is expected to meet his or her targets. Enterprises should look to the consumer world for inspiration and find ways to creatively combine existing data sources and technologies to create new innovations that benefit employees, partners and customers.

The Digitization Of Everything

We hail cabs on our phones and we buy clothes without leaving the house. Yet many companies are still doing things the way they always have been.

The digitization of everything is exactly what it sounds like — everything we do these days is informed by technology, and companies have to take that into account, said Fenwick.

For enterprises, this means interacting with suppliers, employees and consumers in a far more digital way.

On the employee front, companies may want to adopt internal social media networks so staff members can communicate with one other like they do on Facebook or Twitter. This might take the form of making information available to a broader set of employees, decentralizing decision-making and moving away from “gut instinct” decisions to ones that are data-driven.

For customers, this might mean incorporating artificial intelligence, said Fenwick. An automated chat bot can replace a building full of customer service reps, for instance.

How the digitization of everything will impact organizational structure is an interesting question, said Fenwick. What he does know is that every division in a company must become more tech-savvy.

Many businesses will need to start thinking of themselves as technology businesses, even if they’re not making digital products. Every department will need to incorporate new technologies and embrace innovation as an ongoing effort. They’ll need to figure out how to improve efficiency with technology. And in many cases they’ll need to think more like startups with flat structures than corporations with big bureaucracies.

“Everything will overlap and silos will be broken down,” said Fenwick.

At the same time, it all has to come back to providing value for customers, said Fenwick. Part of the CFO’s job will be answering this question: How will this investment in technology ultimately help boost profits? In some cases, technology drives efficiencies that help lower costs. More interesting are technology investments that help drive new sources of revenue or open up whole new business models.

There are other trends out there too, such as greater adoption of cloud computing and robotics. The CFO needs to be mindful of all of them.

“All C-suite executives need to be more involved in tech,” said Herbert. “It’s [all] about speed to market.”

(Source: Bryan Borzykowski, 3 Things A CFO Should Know About IT, Forbes, May 5, 2016)

 


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