4 Ways CFOs Can Innovate in 2021
“…there is nothing more difficult and dangerous, or more doubtful of success, than an attempt to introduce a new order of things…” – Niccolo Machiavelli, The Prince
As technology continues to infiltrate the business landscape, a number of industry verticals from operations to marketing have started to embrace change. But while finance was an early adopter of some technologies, it still lags behind in many ways.
No one knows this better than CFOs. Surrounded by traditional manual processes, they know the ways they can make improvements, but it’s a struggle to turn a huge ship around.
CFOs need to act as change agents who reinvent the financial domain within their organization, or risk losing to other early adopters. While new technologies like AI, blockchain, and more continue to facilitate the opportunity for better financial process automation, the term ‘innovation’ is not just restricted to technology.
CFOs need to redefine their financial activities in order to deliver the value propositions expected from them in this digital age. Here are four ways CFOs can innovate their financial activities in 2019.
1. Move away from manual financial processing
This is probably the greatest challenge CFOs face on a day-to-day basis. Most organizations adopt an ‘if it isn’t broke, don’t fix it’ mentality when it comes to labor-intensive, manual financial activities.
Although ignorance is relatively blissful, blatant disregard of inherent efficiencies will only make organizations go through common financial management pitfalls—long process cycle, inaccuracies, compliance issues, and more. What most organizations don’t realize is that these traditional financial management practices are not only ineffective but also expensive.
As expectations to do more with less are on the rise, other organizational functions have started to embrace an array of technological solutions in an attempt to lower cost, speed up processes, and improve quality. CFOs need to ensure that their departments follow suit or they have to risk losing relevance within their own organization. In the case of paper-heavy financial processes, optimizing workflows and streamlining processes is the first step in improvement.
2. Strike a balance between processes and flexibility
The next challenge most organizations face is finding a balance between applying their policies and processes, versus the limited functionality of a technological tool. While packaged, ready-to-use software might seem like a right choice, most of the time, organizations are forced to fit their processes around the tool. It needs to be the other way around.
As an organization continues to grow, a packaged solution might become irrelevant and demand more sizeable investment on the IT front. As financial processes are inherently bureaucratic, thrusting them into an inflexible solution will just complicate things further. On the other hand, building a custom finance suite is an unlikely option due to the cost and risk.
However, CFOs don’t have to restrict themselves to choosing between investing in a package solution and building one from scratch. An advanced alternative can help them skip the limitations of both options: process automation platforms.
These platforms offer organizations the flexibility they need to build their own finance suite from the ground up without any coding expertise. So, rather than waiting around for IT, business users like finance professionals can create their own financial solution in less than an hour.
3. Put up new defences to mitigate digital risks
Rapid technology adoption is imminent in today’s turbulent atmosphere. However, as organizations embrace digital capabilities, the chances for threats and new risks continue to rise. Data security and cyber attacks are some of the greatest sources of risk organizations are up against. These are closely followed by compliance risks and liquidity risks.
So, it is essential that CFOs ensure that their current risk management systems are up-to-date and robust enough to address new areas of risks. Technologies like machine learning (ML), artificial intelligence (AI) and big data can be deployed to detect suspicious activities and spot liquidity risks.
4. Bridge the burgeoning talent gap
While technology is important, an organization’s talent pool plays an equally important role. And, financial activities in the future would need workforce with a completely different set of skills due to the digital shift. Skills like digital acumen, quantitative analysis, and collaborative skills will be preferred over others.
EY, one of the Big 4 accounting firms, offers its employees badges as incentives to learn “hot” skills like AI, data analytics, robotics, and more. PWC has developed a comprehensive strategy to make its workforce ‘digitally’ fit. Taking a leaf out of EY and PWC’s book, CFOs need to prepare their people for the future of work.
CFOs need to come up with a personnel strategy that helps them attract the best talent for critical positions and upskill their current workforce. The new talent will have a substantial impact on their organization’s ability to pursue growth ambitions in the future.
In today’s competitive environment, innovating financial activities is not merely an option but a mandatory activity. By actively working to innovate and improve the financial process, CFOs can lay the foundation for sustainable success.