3 key strategies to become a CFO who drives innovation

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To succeed in today’s volatile business environment, chief financial officers (CFOs) need to ensure that their organisations have agile business processes and systems in place to drive growth, minimise risk and costs, and deliver the results expected by stakeholders.

In recent years, the role of the CFO has evolved and expanded to include information technology (IT). But simply overseeing IT is not enough. To create a successful 21st century finance organisation, CFOs must also become more strategic in their use of technology, and even become a catalyst for change and innovation.

Becoming a strategic CFO necessitates a greater focus on leveraging IT—looking ahead as well as looking backward, focusing on the non-financial as well as the financial elements of critical decisions, and operating with an external and internal orientation. With direct management over IT, CFOs have the opportunity to fully harness IT’s capabilities, quickly deploying new technologies that will support business growth while reducing costs.

CFOs must drive strategic IT investments, leverage the latest technologies to improve productivity, and embrace innovation to be competitive in today’s global market. Here are three suggested areas of focus.

Take a fresh look at the basics and focus on getting them right
The 21st century finance organisation must make system consolidation and standardisation of processes a focus of their business applications strategy. CFOs must drive IT to consolidate or discontinue disparate systems and implement a single integrated system for core areas to reduce excessive cost and risk.

Doing so enables more resources to be shifted toward innovation and growth. Standardising processes and properly applying controls are also areas that can be fine-tuned to ensure regulatory compliance and reduce costs. The business processes that are most vulnerable to fraud, leakage, and error are procurement and financial reporting.

Getting the basics right means balancing operational efficiency with control and accuracy. Leveraging advanced financial controls and streamlining the financial close process ensures that finance organisations can accommodate new initiatives without increasing costs or sacrificing integrity.

Become more strategic by aligning business strategy and technology
CFOs are comfortable working in the areas of compliance, reporting, and control—the areas with which they are most familiar. But strategic CFOs step out of the comfort zone to discover new ways to strategise, plan, and capture new market opportunities that further increase the value of the organisation. These CFOs look forward as well as backward, make decisions with both non-financial and financial elements in mind, and maintain an external as well as internal orientation. There are three steps that CFOs can take to become more strategic. » Integrate strategic, financial, and operational planning processes
» Incorporate risk management into strategic planning
» Gain better insight into costs and profitability

By looking ahead as well as backward, focusing on non-financial as well as financial elements, and doing it all with an external and internal orientation, CFOs can add to their strategic value.

Be a catalyst for change by re-evaluating and modernising systems and processes
Since change is one of the few constants in the world, effectively managing and navigating change is vital to becoming a true twenty-first century finance organisation. Technology advances, such as cloud computing, artificial intelligence (AI), machine learning (ML), blockchain amongst others are accelerating the pace of change and driving many companies to transform the way they operate. The cloud offers a way to change the mix of IT spend so more resources are devoted to innovation and fewer on maintaining current systems. By leveraging the cloud, organisations can quickly deploy applications and disseminate standard business processes across the global enterprise.

The CFO needs a data-driven finance department as well as the ability to empower users throughout the organisation to make better decisions. Leveraging advanced analytics to harness big data and improve decision-making is critical. Solutions with a broad set of capabilities for reporting, analysis, modelling, and forecasting will help users discover new ways to strategise, optimise business operations, and capture new market opportunities, as well as gain insight into every aspect of the business.

CFOs of today have a clear stake in enterprise IT strategy and in shaping how an enterprise best realises its cost benefits. As the finance function evolves, CFOs can inadvertently establish a clear organisational culture for digital transformation. Now is more important than ever, for CFOs to realise that new-age technologies can deliver both short- and long-term benefits, including costs savings, improved agility, and faster innovation.

The author is Senior Director, Sales Consulting ERP & EPM at Oracle India.

The thoughts and opinions shared here are of the author.