The role of the CFO is changing across every industry. Modern CFOs are shattering the boundaries of their department’s traditional “scorekeeping” role to provide insight-driven strategies that drive growth for their organizations. But finding the bandwidth to create more meaningful roles for finance teams bogged down by mundane activities is a challenge.
During the fifth session of the CFO Masterclass Keynote Series, panelists agreed that leveraging disruptive technology and automating routine tasks are key to building Finance Departments that easily adapt to changing trends and proactively support an organization’s long-term goals. The panelists offered actionable insights on how CFOs can use digital finance to become true strategic partners for their companies.
The June 19 session completed the first-ever CFO Masterclass webinar series, created by the CFO Leadership Council and MIT Sloan Executive Education to empower senior financial executives to achieve success in the post-coronavirus economy. Over five consecutive Fridays, participants learned from MIT faculty and some of the world’s most forward-thinking CFOs and thought leaders on a variety of relevant topics. Speakers included C-suite executives from Covertus, Fanatics, Mass General, Microsoft, Staples, and more.
The final session, “Innovation, Redesign and Evolution of IT,” featured a panel discussion including:
- Raul Vega, CEO of Auxis
- Jason Child, SVP and CFO of Splunk
- Joel Wilhilte, CFO of AvidXchange
- Peter Hirst, Senior Associate Dean of Executive Education at MIT Sloan
Ash Noah, Managing Director of Learning Education and Development at the Association of International Certified Professional Accountants (AICPA), moderated the event.
Auxis CEO Raul Vega kicked off the discussion by explaining why it’s time for modern CFOs to shed the traditional mindset of finance roles. More than 75% of a typical Finance Department’s time is bogged down by the kind of work that “keeps the lights on” in a business: chasing down invoices, reconciling accounts, and scrambling from one closing to another. But while important, focusing on those low-value activities keeps finance teams stuck in the weeds and prevents them from joining the front lines of company influence.
Even before the COVID-19 pandemic reinforced how nimble organizations must be in the modern era, forward-thinking CFOs were redefining their departments to become strategic partners for an enterprise. Instead of spending most of their time processing transactions and generating reports that detail past events, they are taking an active role in driving growth - using the data they collect to identify opportunities, provide strategic insights, and empower the C-suite to make data-backed decisions business-wide.
“To me, that’s what the future of finance really is,” Vega said. “Not transaction processing, controls, and governance, but being at the axis of strategy, data, and digital transformation.” Automating routine tasks is what frees Finance to move past the outdated paradigm and become the analytics powerhouse of an organization. But while many CFOs want to embrace digital finance, they don’t know the best way to move forward.
Splunk CFO Jason Child said the biggest problem CFOs currently face isn’t a lack of technology choices to achieve desired results, it’s knowing how to select the best fit for their business amidst an overwhelming number of options. Depending upon their needs, CFOs can implement Enterprise Resource Planning (ERP) systems, Robotic Process Automation (RPA), AI, cloud solutions, cognitive computing, and more – and choose from an array of products within each grouping.
Many audience questions during the Masterclass surrounded where to begin digital finance implementations and what tools to consider. Child urged CFOs to invest careful research into leveraging the tool that will add the most value to their organization. The size of the company and number of people expected to interact with a system are important factors to consider to avoid pushing solutions beyond their capabilities.
“There are a lot of folks on the webcast today thinking, ‘All I’ve got is ERP plus Excel,’” said Joel Wilhilte, AvidXChange CFO. “Get out of Excel and get into the collaborative tools.”
Just as critical is finding the right partner to implement digital solutions properly, Child added. CFO Dive reports that more than 80% of digital transformation initiatives fail, making the expertise, talent, and experience of the team you put in place critical to success.
If Finance Departments haven’t deployed an adequate ERP system, the first step is clear, Vega said. But once that is in place, identifying the core business principles driving transformation efforts will help CFOs prioritize their initiatives. Eliminating paper functions and/or manual processing are important goals for transitioning to a modern Finance Department, Vega said. Pandemic lockdowns accelerated the need to eliminate paper processes as employees struggled to continue work from home.
Integrating transactional data is another critical priority, Vega said. About 60% of CFOs in attendance chose forecasting, planning, and analysis as the areas most in need of digital improvements within their departments. Integrating transactional systems so employees no longer waste time compiling information from different sources goes a long way toward improving the efficiency, accuracy, and speed of those functions.
It’s also important to understand the pain points or business drivers motivating change; for instance, whether the organization could benefit from real-time reporting, touchless transaction processing, or one version of the truth, Vega added. Once CFOs have a clear vision of what they want their digital finance department to look like, it’s easier to build the architecture to achieve it.
Panelists had another key piece of advice for CFOs embarking on digital finance initiatives: don’t send expenses sky-high by over-customizing your system. AICPA’s Ash Noah said a common mistake companies make is trying to force inefficient, legacy processes into automation because “that’s the way it’s always been done.”
Roughly 80% of business activities are standard processes that will be streamlined and improved by adapting them to best practices in the new system, Vega said. Panelists agreed that customizations should be reserved for the “secret sauce” that makes an enterprise unique and delivers a competitive edge in the market.
During Splunk’s current SAP implementation, the only system customizations involve its revenue capture tool, Child said. “As much as people don’t want to change a process, they actually should because the way it was done before is not best in class,” he said. “It will create some pain, but we will have a better outcome.”
Panelists also encouraged CFOs to assemble finance teams with diverse backgrounds. While strong financial expertise will always form the foundation of the department’s competency, people, business, and technical skills can add tremendous value to the modern business landscape.
“If there are great people in the commercial parts of your business or other support functions like HR or IT, there can be a lot of opportunity for cross-pollination and training,” said MIT Sloan’s Peter Hirst. Hiring “with blinders on,” he said, “is one of the challenges to the diversity of thinking we need to drive innovation across every part of the business.”
As the role of the CFO rapidly advances, digital tools that automate mundane tasks enable finance teams to focus on the higher-value initiatives that are more important than ever in the post-coronavirus world. Understanding the core business principles driving the need for change and carefully selecting the right partner to lead the transformation process will help CFOs successfully create modern finance organizations. By taking the lead in automating processes, CFOs are also forging an efficient, informed direction forward for their businesses. As the role of the CFO rapidly advances, digital tools that automate mundane tasks enable finance teams to focus on the higher-value initiatives that are more important than ever in the post-coronavirus world. Understanding the core business principles driving the need for change and carefully selecting the right partner to lead the transformation process will help CFOs successfully create modern finance organizations. By taking the lead in automating processes, CFOs are also forging an efficient, informed direction forward for their businesses.
Watch the recap of the session here.