OVER the years, the convergence of technologies has culminated in a few notable tipping points that have propelled financial analysis into the next era of insight and efficiency.
The transition from punch cards to disk and magnetic tape in the 1970s took data storage processing out of human hands and into the digital realm. In the 1990s, widespread adoption of the Internet brought unprecedented insight and collaborative potential to financial analysts everywhere.
Today, the maturation of big data analytics, cloud, mobile and social media has led us to a new tipping point at which organisations are looking to benefit from the significant returns of their IT spending. As organisations continue to master these technologies and begin to factor them more seriously into their financial planning efforts, the role of chief financial officers (CFOs) has evolved in response to this shift.
Increasingly, organisations are turning to CFOs to weigh in on their IT investment decisions. With their extensive skill set and analytics background, CFOs are well placed to identify the “sweet spot” for IT purchases and help businesses align their digital transformations with their future goals. As such, CFOs are becoming more ingrained in the development of investment strategy and taking on additional responsibilities as “chief technology advisors” to the board, delivering forward-looking financial insights to their businesses.
In early 2014, a campaign by the Association of Chartered Certified Accountants (ACCA) and the Institute of Management Accountants (IMA) underscored this development, highlighting the evolving role of the CFO with a new title, the chief financial and technology officer (CFTO).
Modernising finance capabilities
With modern finance’s mandate evolving so quickly, the time has come for financial departments to develop a deeper and broader range of skills to help solidify their increasingly vital role in the organisation.
This will require the CFOs to spearhead the use of sophisticated analytics technologies, modern applications and other latest technology tools to help bring their businesses’ visions to life. Cloud computing, in particular, has become an attractive resource for financial executives looking to put leading technologies at the heart of their operations.
A global study conducted by Oracle and Accenture points to the high potential that finance executives see for innovation using the cloud. More than 25% of those surveyed said they expect the technology to deliver valuable new insights to their organisations in the form of advanced analytics and improved business intelligence capabilities.
In light of this, more than one quarter of organisations are already using the cloud to support their budgeting, planning and forecasting efforts, with another 33% planning to move these functions into the cloud over the next year.
Building the business case
That being said, while modern CFOs have become technology evangelists within their organisations, a gap remains between their ambitions and reality when it comes to emerging technologies such as data analytics, cloud, mobile and social media tools.
One of the main challenges for CFOs will be to highlight the opportunities that companies stand to benefit from if they can capitalise on the convergence of emerging technologies. With many organisations still relying on legacy systems and a good number unsure of where new technology investments can take them, finance executives will need to concretise the business case for intelligent IT purchasing initiatives for the board. Fortunately, CFOs’ strong analytics background and aptitude for assigning monetary value to business decisions make them ideal candidates for the job.
The same global study points to the transformational power of the finance department today, with 68% of respondents agreeing that the CFO is a strong evangelist for the role of technology within the business. Moreover, 66% of people surveyed believe that the finance department is “change-ready” with regards to adapting emerging technologies and systems, pointing to the CFO as a leader in extracting value from leading-edge IT for the rest of the business.
Uncertainty breeds opportunity
Although CFOs are showing strong support for emerging technologies, a significant number of organisations remain unsure of how to direct their IT investments to make modern systems and applications work for them. In fact, the uncertainty associated with integrating new systems is their primary concern when considering investment into emerging technologies.
While there is inevitably some form of risk attached to any investment, the convergence of cloud, mobile and big data has made the business case for implementing new IT tools stronger than ever, as has market demand for quicker and more flexible services. CFOs can help their C-level counterparts capitalise on these opportunities by highlighting how leading technologies can enable them to optimise back-office tasks so they can focus more energy on developing new relevant offerings to secure a strong industry position.
Moving past just ‘keeping the lights on’
Organisations today are spending a large portion of their valuable time and money just to keep their current systems running, often at the expense of allocating time and budget to actually driving growth. Many of these companies still rely on outdated data and paper-based back-office processes to make key business decisions, an approach that compromises their ability to make fully informed financial judgment calls.
Moreover, more than two-thirds of CFOs cannot deliver important up-to-date insight into their businesses’ finances to the CEO, which means that potentially lucrative investment decisions are delayed and companies could risk missing out on potential first-mover advantages.
Organisations today require a reliable real-time vision into their performance and financial position. Emerging technologies can provide CFOs with this insight and enable the finance department to automate time-consuming back-office processes. This can in turn open the door to exceptional levels of efficiency and operational agility behind the scenes, and empower CFOs to deliver forward-thinking insight to businesses that will promote more informed future planning.
The new technology evangelist
CFOs today have unique insight into how their businesses operate, and as such are quickly becoming catalysts for meaningful modernisation of their organisations’ IT infrastructure. With big data analytics, cloud, mobile and social media tools now maturing and delivering substantial value to organisations across the world, the expertise that CFOs bring to the table has never been more valuable for businesses looking to take the lead in their respective markets.
In their new role as technology evangelists, it will be up to financial executives to shed light on the value of these emerging technologies and help companies align their investment strategies with their future goals. In doing so, CFOs can build on their reputation for expert analysis and solidify their position as trusted strategists on the executive board.
Nik Feizal Haidi Hanafi is country manager, applications, Oracle Corp, Malaysia
This article first appeared in The Edge Malaysia Weekly, on March 23 - 29, 2015.