As the UK entered its first COVID-19 lockdown on 23rd March 2020, few predicted we would be in a third one a full year later. Nor did anyone predict the profound effects lockdown would have through the overnight virtualisation of our ways of working. The seismic shift brought about by the pandemic, and the structural impact it has had on companies of all sizes, sector orientation and geography, created the need for a renewed approach from CFOs and the finance organisation.
The pandemic added pressure to most finance functions, with even previously healthy businesses facing new challenges and acute financial pressure. The stress-testing exposed structural weaknesses, the financial hardship demanded cost savings, and the uncertainty required faster forecasting and insight. The initial sticking plaster and work-around approach we saw in the early days to ensure activities could continue, has since shifted to transformation, with CFOs looking to move past business as usual to drive change beyond what most thought would be possible.
The CFO as a digital champion
In response, the modern CFO must look beyond the silo of finance and partner across functions to take a holistic view of the organisation as a digital champion. The pandemic and relentless move towards digital transformation has seen CFOs uniquely positioned to act as the fulcrum point within an organisation when aligning IT projects and spend with company strategy and value creation. The effective leadership of a CFO will allow companies to harness technology and manage the move more confidently into the digital reality of a post-pandemic workplace.
Leveraging technology to improve performance
Although the digital transformation of the finance function is in no way a new trend, the pace of change over the last year has been remarkable. The roadblocks a CFO might typically face when embarking on a transformation programme have been removed to create an opportunity to build for the future. A recent study by McKinsey highlighted how the COVID-19 crisis had brought about three to four years’ worth of digital transformation within a matter of months. Within the finance function, we have seen this manifest in a variety of ways, including the increased use of automation technologies.
Companies have accelerated the finance digital transformation initiatives that were in place before the pandemic and experimented with new technologies to meet new demands. The shift in technological adaption was noted by a Deloitte survey that showed 73% of organisations are now using technologies such as robotics, machine learning and natural language processing; up from 58% in 2019. By setting a clear strategy and roadmap to introduce further automation and digital innovation in a finance function, a CFO can improve process, cut costs, and free capacity for the finance team to focus on more value-adding activities.
People remain the key to success
Instead of simply reducing the human aspect of digital transformation to machines replacing employees, it is more important than ever to consider the culture and capability of the team. After all, the technology selected is rarely the main determinant of a successful digital transformation of the finance function. To realise the power of technology most effectively, CFOs need first to focus on fostering a culture that embraces change and recognises the benefits of digital transformation. We are observing that funds and businesses are seeking to capitalise on this opportune moment and remove resistance to change. In addition to having the right culture, CFOs will also need to evaluate the skillset of the team and bring in new digital savvy talent where required.
The last 12 months has seen digital transformation rise towards the top of the ever-increasing gamut of responsibilities of the CFO. By leading the change and constructing a more digital, insightful and agile finance function with, most importantly, the right talent, CFOs will be better placed to support an organisation when responding to the challenges of tomorrow.