by Simon Wilcox, CEO, Digital Craftsmen
Businesses are adopting new technology, adapting to new practices and driving data-led decisions – which means working with trusted expert partners is becoming the new norm.
For a long time, CFOs and finance departments concerned themselves with historical information: ensuring financial prudence through balance sheets and P&L reports, tax declarations, regulatory compliance and audits. From the outside, finance departments were – and frequently still are – seen as naysayers, stifling innovation and change by gatekeeping capital and cash.
Most CFOs are well aware of the rapid changes and disruptiveness of new technology, and are feeling ill-equipped to handle the expected onslaught on their role and relevance. With CEOs and board directors challenging every department, every team and every individual to demonstrate the value they bring to the organisation, finance teams are no exception in being held accountable for their return on a business’s investment in them.
Make no mistake: financial reporting and compliance is the backbone of every finance department, but perception rapidly shifts towards it being considered a means to an end, part of the day-to-day operations that are expected as a baseline, not as a mission-critical activity. McKinsey is very clear: “Transactional activities are the most automatable, but opportunities exist across most subfunctions.”
In short, the responsibilities of the CFO and the entire finance department move from – know your numbers – to – know what the numbers can do for the business.
What does that mean for you? Smarten up on technology
Whether it’s blockchain-based bookkeeping for tamper-proof records and audit trails, machine learning and AI-based expense declarations, automated A/R and A/P, anything transactional in the finance department is up for grabs by automation. Driven by already largely standardised and automated business processes elsewhere in the organisation, the next step is to close the loop through the finance department. In a commercial world of automated production lines and just-in-time supply chains, any involvement of the finance department will be next to be sacrificed on the altar of automation and rationalisation.
CFOs will remain the voice of financial prudence. However the focus will change from that of reporting the organisation’s balance sheet. Instead, the role and impact in their organisation will be to turn (financial) data in to insights, to generate business intelligence and enable all other departments and teams to better decision making.
Day-to-day work will become much more immersive and collaborative. It is a natural consequence of much closer collaboration across organisational departments that are enabled by the cloud as an underpinning technology and tool, which is finally reaching the finance department. We call this “FinOps”.
Cloud computing is the enabling technology now underpinning what is known as DevOps – the much closer, very agile and goal-oriented collaboration between development and operations in an IT/tech company. And with every company becoming a tech company, regardless of its business, information security ends up high on the agenda, and the role of DevSecOps has emerged.
While large businesses have very developed and differentiated roles on the executive level, the reality for SMEs is that many of these roles will amalgamate and fall upon one person. As the CFO will most likely also be the CIO or CISO, it follows that financial consequences (if failed or not done properly) will fall naturally, alongside risk management and governance, within the remit of the CFO as well.
This role is increasingly exacerbated in SMEs, where tight resources and personnel meet an increasing need of collaboration with third-party product and service providers – both in production/operation and in innovation. Next to the data deluge of operational data sits an as-yet-undiscovered ocean of financial data that your organisation generates every second. But beyond aggregation into ledgers and line items, what are you doing with that data? For example, are CFOs able to identify runaway costs accrued by a rapid prototyping effort that is improperly managed? And are they able to do that in time, before the next credit card bill is raised?
Help from specialists is available
Generating insights from data – especially from financial data – that make sense in the context of your business is not easy. In times of on-demand computing capacity at your fingertips calculating TCO and ROI become ever more difficult. There is no doubt that, while technology has driven the disruption of business, the time has come for businesses to define new requirements, which technology and suppliers will soon have to meet.
To understand what your next steps need to be, check out our video armchair conversation – and most of all, don’t panic.
You can always call us on +44 (0)20 7345 7706 or firstname.lastname@example.org for unbiased and expert advice. Unbiased because we work across all technologies and cloud platforms – selecting the ones that are best suited to your exact current and future needs.
For more information, please visit digitalcraftsmen.com