Digital transformation has forever changed CFOs’ responsibilities. Today, CFOs must adapt to the digital landscape to progress their organization. Traditionally, CFOs used to manage administrative and financial controlling tasks instead of creating business strategies. However, the advent of the digital economy coerces CFOs to reinvent their roles to map strategy to a digitized future world. CFOs can no longer get away with just controlling resource allocation. They need to step up and embrace their critical role in the digital transformation of their companies.
The C-suite employees and board of director’s limit digital transformation initiatives 69 percent of the time. In addition to that, 70 percent of companies either have a digital transformation strategy or are working on one. These facts compel your CFOs to roll their sleeves and get to work on their digital strategy.
Here are Key CFO Challenges in a Digital World
1. Using Technology to Improve Businesses
Blockchain technology and Robotic Process Automation (RPA) are two disruptions influencing all departments significantly. The worldwide spending on Blockchain technology stands at $2.7 billion in 2019 alone. The RPA industry will grow to a $2.9 billion market in 2021.
Related to cryptocurrency, Blockchain has a distributed database in which each node links to the other and creates a transaction network. This complex system is still in genesis and is not regulated by global governments. Many financial authorities suggest that this currency will streamline all transaction types. It has the potential of reducing costs and enforcing security. Hence, it can be a great tool all CFOs should focus on.
RPA exponentially diminishes the stress on your staff by efficiently handling back-office tasks and other financial operations. Software robots will now process administrative tasks in seconds with high accuracy.
Hence, CFOs should focus on the application of Blockchain and RPA in their businesses.
2. Knowing what Digital Indicators are Important for Strategic Decisions
In the pre-digital era, CFOs used to evaluate a possible acquisition based on its tangible assets. However, this evaluation process has changed to accommodate intangible assets like intellectual property, customer data, and brand image.
CFOs should have in-depth knowledge to assess the value of these intangible resources. Digitally savvy CFOs will be able to measure the value and relate them to several key performance indicators (KPIs). Without this knowledge, deciding on high-risk strategies will be difficult.
Research says, 56 percent of C-level executives believe they can make poor decisions because of faulty data. In addition to that, 72 percent of executives believe management decision-making is of average efficiency (If not less).
So, all CFOs should take their time to upgrade their knowledge to be relevant in this digital world.
3. Using Big Data Analytics to its Fullest Potential
If you think data analysis is less critical than accounting, you’re wrong. Not only do CFOs need to examine and check finances, but they also need to incorporate Business Intelligence (BI) technology in their systems. These systems help them uncover several customer patterns and industry trends. Big data analysis can give you a meaningful overview of a firm’s operational capabilities and performance.
Deeper BI also investigates the influence of different processes and systems on key performance indicators like employee satisfaction, marketing, and overall execution. Several BI tools help CFOs uncover deeper insights from gigantic heaps of unorganized data.
You avoid a possible overload on your resources by obtaining critical information that isn’t apparent at the first look. Access to real-time data speeds up the trend-spotting that improves the planning and predicting processes.
Forbes states that 56 percent of firms are adopting big data analytics. Furthermore, 150 trillion gigabytes of data need to be processed by 2025.
4. Protecting your Assets using Cybersecurity
An exponential increase in online interactions has also led to a lot of cyber risks. Many operations use the internet to transmit, alter, and access data. As a result, handling investment on the web and improving email and data security are CFO’s top concerns.
All firms need to find ways to protect organization and customer data from malicious cyberattacks. Furthermore, CFOs need to ensure they protect their employees from cyber predators as well. Efficient data security measures help you deal with various audits by fulfilling regulatory and compliance requirements.
Today’s CFO needs to know about the latest compliance laws to keep up with the competition. Any alterations to these laws can significantly impact a firm’s long-term plans by making it liable to legal proceedings. CFOs need to stay on top of their game to eradicate all uncertainties at the earliest and safeguard the organization’s profits by investing in the latest cybersecurity measures.
95 percent of cyber breaches occurred in the fields of government, retail, and technology. Hence, these sectors need more protection from cyberattacks.
5. Hiring and Retaining the Best People
Skilled employees are a huge challenge to attract and retain. The demand for such employees is so high that it’s becoming difficult for CFOs to ensure they stay. Finding highly-qualified labor and keeping them focused on skill development is one of the top challenges of all CFOs.
An important filtering technique is to be extremely strict with the recruitment process and hiring the best talent available in the market. However, ensure your skilled labor fits in with the company culture so that they contribute to the team. Finding skilled employees that have a good collaborative spirit and critical thinking abilities are critical for business success. On the flip side, you’ll have a hard time finding such employees but sticking to your standards will yield great rewards.
It’s also important to have transparent communication with your loyal employees. 63 percent of firms fail to have a regular connection with their employees about career aspirations.
CFO’s challenges increase due to the digital economy. We hope our list helped you identify key areas to focus your energy on. So, embrace change and forge ahead in this digital world.