The CFO's Guide to Leading Digital Transformation

If you missed the memo, here it is: CFOs are no longer back-office workers whose job requires only a trace of technological investment. 

In today’s finance world, CFOs are more than just bean counters. 

Instead, CFOs are strategic partners. They must keep pace with technological advancements to add value to the organization. The finance function must evaluate massive volumes of data, glean crucial insights from the data, and make well-informed strategic decisions. 

Let’s break this down a bit.

The CFO's Growing Role in the Digital Era

According to a PWC 2022 Global Digital CFO Survey, 73% of CFOs agree that financial digitalization is a high-priority matter — not just a nice-to-have. 

A more recent Gartner survey, published in January 2024, reveals that CFOs are more focused on leading digital transformation efforts than on any other issue, including improving financial metrics.

While some CFOs singularly focus on receiving clean audit reports, their counterparts are using generative AI to predict market trends, understand consumer preferences, reduce risks, and capture new markets. 

CFOs who don’t embrace digital transformation may wake up and realize the ground has shifted under their feet.

Here’s how this is playing out.

From Bean Counter to Strategic Partner

The CFO of the past was a bean counter, a number watcher, the guardian of a company’s financial health. It was an isolated function, a siloed, back-office role. 

The CFO focused on ensuring numbers were accurate and the company complied with financial regulatory requirements. 

Though number crunching is important and should remain a critical component of a CFO’s role, today’s CFO is more of a strategic partner than a bean counter. They’re a valuable member of the C-suite who influences the trajectory of the business and the decisions it makes. 

The transition from controller to CFO is at full speed. Today’s CFOs actively engage with CEOs, CTOs, CMOs, and other C-suite peers to co-design holistic strategies that drive sustainable business growth.

Also, there are no more silos. Today’s CFO function is collaborative. 

The transformation of a CFO from a steward to a strategic partner is because of several factors, including regulatory changes (think of the Sarbanes-Oxley Act), a volatile risk environment (think of the 2008 financial crisis and the COVID-19 pandemic), and new technologies.

Tech Champion

Today’s CFO shouldn’t view tech as reserved for IT folks or the IT department. 

Also, they should not approve technology budgets for other departments, while leaving their own department stuck with outdated technology tools and systems. 

Instead, they should be the number one tech champion in the organization.

According to the 2022 Digital Controller/CFO study by Controllers Council, CFOs are taking on more responsibilities for technology, including implementing finance and accounting automation systems by using tools such as AI and machine learning. The study reveals that 69% of CFOs have increasing responsibilities for corporate technology and that CFOs are “early adopters” of automation.

A modern-day CFO should support investments in emerging technologies, including AI, so long as these technologies enhance operational efficiency, streamline processes, or create additional income streams. 

Data Wizard With Analytics

We’re in the digital economy, where data is the new gold.  

Today’s CFO needs to know more than traditional number crunching. 

CFOs who can mine data — extracting meaningful insights from vast volumes of information — to the benefit of the organization, will be rock stars. We’re dealing with big data, advanced analytics, and business intelligence tools, including Power BI and Tableau. 

They must be a data wizard, who identifies trends, predicts shifts in the business environment, and helps the company make informed decisions. 

First Steps in Leading Digital Transformation

In the new world of technology, a present-day CFO must take concrete steps in leading digital transformation within the organization. 

On a more practical level, CFOs should:

• Embrace continuous learning and professional development.
  
  CFOs, and their team members, should learn about digital technologies relevant to finance, including cloud-based financial systems, automation tools, and advanced analytics platforms.
• Stay informed about emerging technologies.
  
  A CFO will want to participate in industry forums and other networking events to learn how peers and competitors are using technology.

CFO Digital Transformation: Organizational Challenges

While investing in digital technologies pays off, challenges abound, some of which we highlight below.

• Lack of appreciation: The organization may view digital transformation as over-hyped and therefore, have a lackluster attitude towards embracing it.
• Integration issues: Difficulties with integration, including to what extent the new digital system will integrate with an existing accounting system, can pose a challenge.
• Security: The organization can be concerned that cyber breaches will financially damage an organization’s operations.
• Resistance to change: While change is the only constant thing, as the Greek philosopher Heraclitus said, humans still interpret change as a threat because of several reasons, including fear of the unknown.
• Settling on a digital solution: With many solutions out in the market, some of which cost top dollar, selecting a specific one can be frustrating.

Avoiding the Pitfalls of Digital Transformation

To overcome the challenges of digital transformation and avoid pitfalls, CFOs should implement the following guidelines.

• Education: CFOs should not assume everyone in the organization appreciates the benefits of CFO digital transformation. They must organize organization-wide seminars to candidly discuss the concept of digitization. Without support from those involved, it will be difficult to successfully implement new technologies.
• Change Management: Some studies show that change management is the number one challenge CFOs face in digital transformation. Change can be intimidating. Therefore, CFOs should handle organizational change in a way that reduces disruption. For instance, assure workers that their roles are safe and that outcomes will improve.
• Picking a digital solution: When choosing a digital solution, CFOs should look for one that gives the best functionality, entails the lowest implementation time, and comes with a reasonable cost. Also, the system should be secure and integrate seamlessly with the existing accounting system.

Conclusion

Considering its benefits, including enhancing efficiency, CFO digital transformation is a matter of when — not if. Forward-thinking CFOs can choose to relieve their team members of tedious manual work, lower audit stress with systems that come with a fully transparent audit trail, and unlock decision-making with accurate and intelligent CFO workflows.