As businesses emerge from the volatility of the past two years, CFOs are tasked to come up with inventive ways to balance cost-efficiencies and digital investments.
Undoubtedly, CFOs are the best fit to take the lead in restructuring company finances. The role of finance teams has evolved significantly, they help stakeholders understand what is needed to improve their financial position.
Research shows that 32% of CFOs believe that in the past two years, their role has been instrumental in driving growth.
The pandemic compelled many finance leaders and teams to adopt automation to help offset costs and close process gaps. When surveyed, 40% of CFOs revealed that automating manual processes is a top priority, and 89% expressed urgency in evaluating their finance function’s digital transformation. To drive value, CFOs should consider leveraging finance technologies like predictive analytics, intelligent automation, and machine learning to improve data quality and optimize enterprise costs.
According to Gartner, CFOs should deliberate on these 5 considerations when making strategic digital investments:
- Financial Benefit
CFOs should weigh the financial benefit by deciding whether the initiative is worth pursuing. Enterprises can lose focus of their ultimate goals when too many initiatives are being pursued at once. Be selective to ensure the initiative your team is striving for will create a significant impact on the bottom line.
Anticipate the potential financial benefit by asking:
- How much will the enterprise save once the new finance technology is implemented?
- Can this technology improve cash flow immediately?
- Business Impact
CFOs should anticipate and plan for how implementing a new solution will influence the entire business. Communicate with your other executive leaders and staff to understand how the initiative may impact their daily operations.
Consider the following regarding the possible business impact:
- How will other business unit leaders or staff benefit from this initiative?
- Outside of the finance function, will this technology negatively impact any other business unit’s operations?
- Time Requirement
Regardless of how the CFO approaches onboarding a new finance technology, implementation and cost optimization can take time. The most important consideration in terms of time is how long it will take for the organization to begin capturing costs savings and ROI.
Anticipate the potential time requirement by asking:
- How quickly can the company begin to see ROI?
- How can we measure the savings from this technology?
- Organizational Risk
The effectiveness of pursuing a digital investment for cost optimization is dependent on internal stakeholders being capable of adopting change. CFOs must take the lead in articulating the benefits of the new solution and demonstrate how impactful the outcomes will be for the short-term and long-term success of the company.
Anticipate the level of organizational risk by asking:
- How will we enforce strong change management and create internal support?
- Is our enterprise capable of adopting new finance technology?
- Investment Requirement
Before a new initiative commences the CEO and other stakeholders must support and agree to its potential. Highlighting how new technology will improve operations, reduce costs, and create a competitive advantage will help support the business case.
Anticipate the investment requirement by asking:
- Does the initiative require a large, upfront investment before savings can be captured?
- Will delaying the initiative put the business behind competition?
Ready to start making strategic digital investments? Download the infographic 5 Rules for Enterprise Wide Optimization to learn more.