With only two days left in another tumultuous year, the period for the wave of behavioral changes is near. For individuals, this may mean finally going to the gym the way you promised you would, reading a book a month, or seeing a new country this year. For businesses, this might spell out the adoption of a new strategy, scheduling approach, or technology implementation. As many are well aware of, the majority of these resolutions are sadly not realized/held consistently.
Technology implementation has been a popular course of action in recent years for many organizations. Business intelligence, data security, and and has proved particularly effective for finance departments, given the recent powerful innovations in finance technologies.
Given the time of the year, and the opportunity for change it supposedly provides, here’s a suggestion for finance professionals in 2022: commit to a pragmatic approach to technological implementations this new year. So many organizations fail to do this successfully, and you can fix this by being realistic and level headed in your search for organizational self-improvement.
Approaching Pragmatism Based on Organizational Size
Large companies are firmly embracing robotic process automation (RPA), leveraging sophisticated data analytics and visualization tools, and exploring the use of blockchain and other new technologies. The media say small and medium-sized enterprises (SMEs) must also proactively embrace these new technologies or risk being competitively disadvantaged.
However, for smaller scale companies, enduring the adversity and unpredictability of COVID-19 for the last year and a half has dealt significant damage. As a result, the priority is more existential. As a small business CFO, how do you navigate toward business recovery? Moreover, how do you ensure data quality, security, and privacy as cybersecurity breaches stubbornly persist? The following are a few practical considerations as waves of new technology continue coming our way.
1. Heightened Data Security
A data security breach is one of the CFO’s biggest nightmares. Malware attacks, especially ransomware attacks, are on the rise. To prevent harm to your network and mitigate risk, consider requiring multi factor authentication to access company data, encrypting email, securing email attachments, and implementing other best practices. In addition, revisit cash management and other controls, acquire adequate cyber insurance coverage, and develop contingency and recovery plans in case a cyberattack does happen.
2. Business Stabilization
A small business CFO’s top priority is to navigate through the intense and ongoing headwinds of COVID-19, such as finding and retaining talent, overcoming supply chain glitches, negotiating fair terms with aggressive customers, and managing cash. Until management stabilizes the business, worries about the next wave of technology are not as relevant, and should be put off.
3. Maximizing Benefits
For many SMEs, the cost of investing in and maintaining their enterprise resource planning (ERP) system is high. Many managers and owners don’t receive what they need to run the business effectively. Due to inadequate training, users aren’t leveraging the ERP system’s full capabilities. The root cause may also be system complexity, poor-quality data, or insufficient reporting capabilities. Leveraging their inquisitive and process-oriented natures, CFOs are well-positioned to analyze the status quo, identify the best technologies coming out around the new year, that are simple to learn, and allocate budget for system enhancements and training.
For example, organizations looking to improve their business intelligence capabilities in 2022 can turn to products such as Qlik, tableau, and Sisense, which provide innovative ways to process and collect large sets of unstructured data across business sources. In the realm of FP&A software, organizations like Netsuite, DataRails, and Vena offer solutions that automate traditionally manual processes, ensure the accuracy of your data sets, and provide you with a new level of insight in all your major business decisions.
4. Develop top-down technological proficiency
CFOs must lead by example by demonstrating a willingness and desire to upskill in technological areas. Indeed, at many SMEs, the CFO has oversight of the IT function and is the de facto chief information officer. Therefore, as CFO, it is crucial to cultivate your knowledge of new technologies and trends to determine which tools will be most effective for your organization.
To develop technological proficiency, ask the right questions when considering new technologies. For example, could RPA benefit the team? Consider how data analytics and visualization tools are becoming more powerful and easy to use. Could you leverage data analytics and visualization tools to enhance finance and other departments’ storytelling abilities, enabling cross-functional partners to understand current realities and trends better and thus make better decisions? New technologies enable organizations to address ever-changing regulations, tax laws, internal control requirements, corporate governance, evolving reporting needs, and more, especially for global and complex businesses. Is your company facing any of these challenges? Does it have the right software to take them on?
5. Having a Comprehensive Strategy
Too often, companies make investments over time to address one need or another without an overall strategy or rationalizing existing systems. Ideally, small business CFOs are qualified to drive their organization’s overall philosophy and strategy regarding new technologies. When doing so, consider how much of the IT structure should be outsourced to a managed service provider (MSP) versus being internally managed. Likewise, define the organization’s appetite for implementing software “off-the-shelf” versus requiring customization to meet the (perceived) unique needs of the business.
6. Discipline
There are multiple ways CFOs can ensure discipline in the technology selection process. The CFO should drive cross-functional discussions regarding each initiative, verifying the purpose, need, strategic objective, and problem. Strive for consistency in project evaluations and push the team to identify alternatives, along with the pros and cons of each. Conduct a general assessment of risks and opportunities, including an analysis of the cost and impact of not moving forward. Research potential partners, including software providers, MSPs, consultants, and others, assessing their reputations, financial soundness, and track records. Lastly, drive the ongoing evaluation of these investments’ performance, course-correcting when appropriate.
Your Department’s Guide to A Successful New Year’s Resolution
Based on the results of a number of successful transformation programs, a likely successful digital transformation journey can be outlined by adhering to three practical steps taken by a business:
Financial analysis and planning systems’ review
Education of business executives of the transformation
Preparing the information and the data supporting transformation needs
The centerpiece for success is to expand a level of knowledge in an organization far beyond technology upgrade or new system build. Without discarding the importance of technical knowledge, the aim is to build understanding and involvement of all levels of the business in a transformation, buying into its values and seeing their role in a new business structure.
By closing gaps between strategy, operational management, and technology, you will create a fully balanced and low risk approach to successful Digital Transformation.
The transformation is an integrated process touching all areas of your company life. Being on the front line of business digitalization (financial data analysis and management is always a high priority), FP&A departments are also setting an example of implementation processes. This makes finance not only information and data provided across an enterprise, but effectively a center of excellence in collaborative work between business and technology streams.
Following this road, Digital Transformation will undoubtedly bring an organization to leading positions and make it stronger and more flexible in a constantly changing world.