Culture Leaders, Agents of Change: Digital CFOs, Get Ready to be Uncomfortable
For digital CFOs, becoming the organisational data master is one matter; assuming roles related to culture and change is quite another.
As we settle into 2024, we’re welcoming the era of the digital CFO – that is, the evolving role of finance chiefs, who are taking a leading role in identifying areas of strategic organisational growth, as well as their traditional financial management and reporting capabilities.
The digital CFO is likely to wear many hats, including one that involves a greater appreciation for how data interplays across the organisation. This is a natural evolution of the role, given the finance department’s ownership of much of the transactional and operational data. However, technological change almost always comes coupled with change for the people (and systems) who interact with the technology. Thus, digital CFOs may also need to try on the hat of cultural leader and catalyst for change, which will feel like an uncomfortable fit for some.
Breaking down organisational silos and enabling collaboration
For digital CFOs who wish to lead their business through a data-driven transformation and into a seamless, integrated future, it’s highly likely that any legacy tools and strategies are particularly suited to working in the much-dreaded organisational silos. More often than not, a prominent feature of your typical silo is at least one Excel spreadsheet, with an owner who is very attached to their system – and not ready to let it go.
One particularly monstrous symptom of a siloed organisation is the presence of an org-wide Franken-System – a disconnected and dysfunctional monster system held together by (virtual) threads, usually featuring multiple Excel documents. For organisations at the start of the digital transformation process, the finance department itself may even contain multiple silos and its own version of the Franken-System.
Silos are problematic for numerous reasons, not least of which is that integrated business planning processes that are aligned to the overall strategy, and which look across multiple departments, are all but impossible in such an environment. Workforce planning or sales and operations planning are two examples of such processes.
For many years, finance has been driving the use of enterprise solutions to deliver high-value modelling within the finance department itself. The digital CFO can be instrumental in using these same skills and technologies to help the organisation model and forecast outside of finance.
Thus, the digital CFO is likely to become a key proponent of ending organisational silos and democratising data, over a multiyear period, as well as preparing the workforce for wide-reaching organisational change. For organisations with less maturity, the work may need to begin within the finance department itself, before spreading further.
Workforce planning for the finance function - and further?
Within most businesses the workforce is the major cost and yet many businesses do comparatively little workforce planning. Relatively few HR leaders are effectively using talent data to shape acquisition strategies, as well as improve employee retention and engagement. This is a specific example of how the digital CFO can start to break down silos within the organisation, rationalise data and help to facilitate financial decision-making which is aligned with the overarching strategy.
In the brave new role of the digital CFO, as the finance team models exceptional, data-driven team-building practices for the rest of the organisation, workforce planning in a broader sense is likely to become a crucial part of the finance team’s remit. Why? Because they are able to produce accurate modelling and predictions for profit, cash flow, capacity and more; and support the broader executive leadership team in making critical decisions related to talent strategies.
Finance modelling provides ample warning and constructive input into the hiring of and gaps within organisational talent when what-if scenarios enable business unit leaders to see the cost-benefit and impacts when it’s needed.
Whether it’s planned workforce changes or sudden, unexpected events occur, the finance team should be agile enough and in control of the correct technology to reforecast and plan workflow for the new future accordingly – and quickly.
The digital CFO as an agent of change
Finally, digital CFOs will be expected to assume the role of digital transformation champion, enabler and evangelist. If the finance perspective is missing from a broader transformation, there may be missed opportunities, further siloed data and unrealised benefits.
In other words, the digital CFO is having to become very comfortable with a lot of change, very quickly. They must also prepare and motivate the finance department for this change.
At a tactical level, this also means thinking differently about some of the critical business processes owned or sponsored by the finance department. A great example of this is how the organisation prepares and considers business cases for new technology investments – as well as the market engagement leading up to the initial investment decision in order to achieve the optimal outcome. We’ll be taking a look at this in the March issue of The Brief.
Assuming the role of champions and enabler
While it may be unchartered territory for many finance leaders, the digital CFO has a key role to play in breaking down organisational silos and enhancing collaboration; as well as helping to plan for a more resilient workforce. They must also assume the role of digital transformation champion, evangelist and enabler.
At the same time, the digital CFO has another critical stream of responsibilities to consider. They will be well-positioned to help build a dynamic approach to resilience across the organisation, enhance customer experience and lead the finance department towards more agile operations.
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