Is ‘digital transformation’ just a slick phrase? For many CFOs, it can be tempting to think so. With their radars acutely tuned to financial performance and returns, many will feel sceptical about a concept that demands substantial investment, has wide-ranging business impacts – and no shortage of hype.
This is dangerous thinking. Everywhere there is evidence that digital technologies are transforming the way businesses operate and how they interact with their customers. Whether it’s trailblazers, such as Netflix, AirBnB and Amazon, or more established companies ‘disrupting’ their own value chains before someone else does.
Disruption on this scale, and we expect it to accelerate over the next few years, has significant impacts across the organisation and profound implications for CFOs. From an expectation that finance provides richer, more timely insights to help plot a course through uncertainty, or provide better ways to understand how value is created or destroyed, to the need to be more efficient so savings can be reinvested in the business – the CFO will be expected to take the lead, and rethink their function, its role and operating model, for a changing future.
But in the digital enterprise, front, middle and back offices need to transform together to realise the full potential of digital. Are you ready for your finance systems being asked to match the speed of your customers’ expectations? Or for a future where the majority of finance processes are delivered in near real-time by artificial intelligence?
Change on this scale is daunting, so cautious CFOs could be tempted to dip a toe in the water. A few discrete digital projects can feel like a safer way to sample digital transformation and see how it delivers. But this approach risks missing the point. Digital transformation requires a fundamental reappraisal of what the business will be, how it operates and how it will serve its customers in the future.
At KPMG, we see three gaming-changing technologies enabling strategic shifts for the businesses we work with: cloud, data and analytics, and artificial intelligence (AI).
One client, for example, is using the cloud to dramatically reduce the time it’s taking to implement a new general ledger system. They’re using the predefined operating model from KPMG Powered Enterprise to accelerate the design phase, and the latest cloud technology to avoid having to build a new infrastructure from scratch. Once implemented, the solution will deliver important benefits in terms of flexibility. A cloud platform is always up to date and adapts easily to accommodate new processes or different operating models. It can give our client the agility they need to respond effectively to changing market dynamics.
Cloud platforms typically accelerate data and analytics capabilities, which are built-in and easy to use. In an era of disruption, the importance of being able to make prompt, confident decisions from data is vital. Effective management of your data is also a prerequisite for implementing AI, so the cloud should be seen as a platform for the future.
In this way, technology has the potential to transform the shape and focus of the finance organisation itself. With access to real-time insights from data, and new delivery models enabled by AI, the organisation has a new opportunity to position itself as a strategic adviser to the business. Could today’s CFO be tomorrow’s Chief Performance Officer?
Beyond the digital transformation of the finance organisation, CFOs have a critical role to play in ensuring their business is equipped to meet the wider challenges from digital disruption. Success will come to those who embrace the new possibilities created by digital technologies, not simply seeking to adapt or adjust, but making the bold decisions to rethink their business for a digital future.