Digital Transformation » It’s more than finance: the role of CFOs in digital transformation

Austin Clark discusses why finance leaders should play a starring role in digital transformation projects – for the good of the organisation

There’s no escaping the fact that extraordinary digital change is impacting businesses, and that the pace of change is accelerating. That leaves organisations with a headache: such is the breadth of digital transformation, who is actually responsible for driving it?

This is a subject addressed by an IFS Digital Transformation Survey. When asked who within the company has responsibility for driving digital transformation, the respondents call out the CIO (40% of the respondents), CEO (39%), and the CFO (35%), while the CTO (20%) and the CMO (6%) are not considered as influential in this area.

When the C-suite leaders answer who owns digital transformation, they often point at themselves. Fifty-three percent of the CEOs consider they are responsible. The corresponding numbers for CFOs and CIOs are 69% and 63% respectively.

This muddled picture provides an opportunity for somebody to take charge – and there’s a very good case for this person to be the CFO.

The case for the CFO

A recent report published by ACCA – Race for relevance: technology opportunities for the finance function – did a good job of discussing the significant opportunities to be gained from the use of technology in finance. That’s all well and good, but there’s one other major reason why CFOs need to lead digital change – it can help to avoid organisations stifling success through budgetary restrictions and the wrong mindset.

All too often, digital transformation is governed by a focus on operationally-driven strategies when it should be financially-driven. The best CFOs will focus thinking on the cost-effectiveness and added value digital processes and technology can bring the wider organisation. Without this type of thinking, organisations achieve digital transfer, not digital transformation.

You could argue that it’s a classic case of OPEX versus CAPEX. Where OPEX dominates, digital transformation project managers can often hesitate and be reluctant in case they overspend. Where a CFO is centrally involved, mindset and culture moves away from simple budgets and onto ROI, value, revenue benefits and cost-effectiveness. Indirect benefits – staff retention and development springs to mind – can also be taken into account. Analytics and reporting, the mainstay of finance functions, are also brought into play. As is consistency of measurement.

Learn from experience

Another point to add into the mix here is that many organisations find it easier to start digital transformation with finance and administrative processes, such as expense management. These tend to be less organisation-specific (while permitting the configuration of approval processes, for example) but also offer greater opportunities for enhanced user experience, giving a greater payback – sooner. The experiences of this change can then be taken forward into wider digital projects.

CFOs are, without doubt, well placed to act as the central pivot for digital transformation. By setting the tone for the budgeting process and subsequent resource allocation they can become digital leaders. Finance can also view indirect benefits to create future value in the organisation, rather than trying to beat last year’s revenue forecast. And that must be the goal of digital transformation.

Austin Clark is a digital transformation and cybersecurity journalist