In a disruptive world, CFOs have evolved drastically, yet to deliver continuous value, there is need to adopt modern digital initiatives
To mitigate the challenges faced in an ever-evolving world, sustainable business models are built on vision and adaptability. And the role of the CFO has undergone severe changes, particularly in the new normal. Today, as the world normalises post the pandemic, CFOs need to harness more sustainable initiatives to foster business continuity.
Kaushik Mitra, senior director; Cloud ERP with Oracle India explains how the role of the CFO has radically changed over time and sheds light on the adaptive strategies that can be used to sustain business continuity. Kaushik has worked with Oracle for close to 18 years, a significant part of which was spent in managing Oracle Applications and Cloud Technologies. In his earlier role at Sify Technologies, he was responsible for setting up and driving revenue and growth for Cloud Application Services.
Kaushik reiterates that CFOs must look at the adoption of modern and agile tools and processes such as cloud based SaaS solutions and shrug off traditional legacy systems as they aren’t relevant anymore.
How has the role of a CFO been redefined in recent times? How have changing business and operating models impacted the role of a CFO?
In recent times, the CFO’s role has undergone a great shift. CFOs face a dual challenge, on the one hand they are responsible to accelerate growth and digital initiatives and on the other hand they have to preserve and restore organization’s financial health. The futuristic CFO has a big role to play in acceleration of adoption of modern digital initiatives that are designed to deliver continuous value, help in adopting agile strategies, mitigate real-time risks and enable the organization to take faster and accurate decisions.
Situations like the pandemic, mergers, risk and regulation, compliance and talent shortage triggers change. A lockdown hits revenue, disrupts supply chain and causes liquidity issues. While business continuity is the key, near time stabilization is the next normal while preparing the organization to take bold moves during recovery. The impact is that, now CFOs are under increasing pressure to provide accurate and reliable information faster and more efficiently to both internal and external decision makers.
How can CFOs today pivot their organizations to strike a balance between technological transformation and a sustainable business, while unlocking greater value for their business?
To pivot their organization forward, CFOs must enable their organizations by adopting modern and agile tools and process. The legacy applications which were created earlier doesn’t necessarily have the best practices that organizations need today. And so, to stay relevant, traditional IT systems need to pave way for SaaS based cloud solutions that offer a complete and unified platform, have integrated analytics that respond swiftly to model scenarios, with automations to simplify processes and offer a modern user experience.
[box type=”shadow” align=”” class=”” width=””]The adoption of cloud-based SaaS solution future proofs the CFO’s investment while providing significant values like growth in annual revenues, better User Experience, quicker and smoother closure of books, publish narrative and statutory reports faster, and automate repetitive processes.[/box]
What are some pitfalls that CFOs need to avoid with technological adoption?
While adopting technology, these are some of the risks that are faced by CFOs in the ever-changing business environment.
- Organizational Risk: Organization structure becomes complex with time thus leading data to concentrate in silos. This leads to loss of information during appropriate time.
- Technological Risk: IT systems become complex with time and customizations. A re-engineering of legacy process becomes imperative to help the organization remain agile and face uncertainties.
- Skill Gap Barriers: Current skill set of the finance function is too narrow. In addition to this, Finance functions needs more data analytics skills if they are to deliver more forward-looking analysis for the business.
These are some of the pitfalls that CFOs need to take closer look not just for technology sake but to pave way for organizations as they evolve over time and stay competitive in the market.
What in your opinion are the need-gaps a contemporary CFO should address? How can CFOs foster innovation and keep pace with technological change?
Digitization of enterprises has been a trend for quite some time. However, with the pandemic, there is a surge in remote work models and virtual business models. To address these needs, an investment in technology is required to increase speed, make an organization flexible, drive business continuity and helps to contribute immediate growth.
CFOs need to drive innovation programs which would help them to mitigate risks in the longer run and be compliant, harness technology to drive business and growth. They need to implement cost management tools to move capital expenses (CapEx) to operational expenses (OpEx), thereby supporting a shift from physical assets to digital assets such as subscription.
To keep pace with technological change digitalization should include Cloud Based ERP adoption, model business scenarios through advanced data analytics, drive cost optimization and eliminate redundancy through AI/ML capabilities and utilize resource for value added work.
The financial function has undergone a drastic change with technology and more comprehensive business ecosystems. Your views on this.
The finance function has greatly benefited with new technological changes. Many organizations implement technologies that have AI, ML, Digital Assistants and Embedded Analytics. With the help of new age technologies, finance functions have automated their processes for e.g. invoice processing from suppliers, accept contact less payment from customers , have digital assistants to address queries and take actions, close their books while being remote and model scenarios through advanced analytics . While operating in their ecosystem – the finance functions leverage the power of technology and data to stay resilient, compliant and competitive thereby justifying investment.
What strategies or tactics should a CFO mobilize first to strengthen FP&A?
While adopting an IT solution for an organization, a cloud-based SaaS solution can be a key strategy since it mitigates risk and is flexible. The finance leader’s top priority, is to optimize the company’s liquidity and cash reserve. Organizations can strengthen their business by divesting nonperforming assets or shifting resources in favor of higher-value activities. To take appropriate action, FP&A team needs to act with precision while modelling impact of divestiture or integrate new companies, systems and employees. CFOs being the sponsors of a company’s digitization need to weigh in all the capabilities of an IT solution that can create innovative services with less risk and help to address change.
How are CFOs navigating compliance related challenges today?
It starts with a well-integrated risk management approach to security, risk, and compliance to ensure that any structural or business model changes won’t introduce new risks that can negatively impact a brand’s reputation or bottom line. Automate separation of duties, compliance reporting, digitizing SoX and audit workflows, including using revenue management tools to recognize and report annual recurring revenue (ARR) in compliance with accounting standards are some of the examples that a cloud based SaaS solution offers as compliance measures. Organizations have also significantly increased their focus on data and cyber security. Financial organizations are now more focused to ensure that the data is protected from malicious attacks, and are leveraging Cloud based technologies with Data residency policies within Data Centers in India. Audits can be smoother once a unified cloud solution is adopted.