Digital technologies have been transforming the way business is done for some time, but the COVID-19 pandemic led to increased adoption of technology amongst business across all industries.
In fact, according to a survey, 77% of CEOs reported that the COVID-19 pandemic led directly to an acceleration of digital transformation plans in their businesses.
This has led to sweeping changes in how successful businesses operate these days, and this include the C-suite executives in these businesses.
As a CFO, being good with numbers and business strategy is no longer enough if you want to be effective in your role. You must also be able to leverage new technologies in order to automate and streamline financial reporting processes, as well as data analysis.
This would enable you to obtain valuable insights from your business’s financial data, and put you in a position to advise your fellow C-suite executives on business strategy.
However, to truly reap the full benefits of digital transformation, every executive in the C-suite must individually cultivate technological savvy as well. And as the CFO, you can play a central role in encouraging this by cultivating trusting and productive relationships with your fellow executives.
Here’s why it’s crucial that you, as the CFO, lead the way for your fellow C-suite executives in adopting digital transformation for your businesses, and reaping the benefits in your respective positions.
These Are The Five Most Relevant Challenges That CFOs Foresee For This Decade.
Why It’s Important To Cultivate Technological Savvy Among The C-Suite
According to a survey conducted by McKinsey involving 1,331 C-suite executives in a range of industries and company sizes, businesses which go with bolder digital transformation strategies see greater economic success from the effort, than those pursuing digital strategies that involve only incremental changes.
These top-performing companies report an average return of 50% of the full revenue benefits that their digital transformation strategies could have achieved, in comparison with an average of 31% among all respondents in the survey.
According to McKinsey, this is because the top-performers are more likely to adopt practices that enable faster innovation, as well as automated processes for testing and deploying new technology. They also spend twice as much of their digital and technology budgets on building new digital businesses, compared to their less successful peers.
As such, it’s clear that to reap as much benefit as possible from their digital transformation efforts, a business needs a C-suite that’s technologically savvy as a whole, able to appreciate and utilise the benefits technology brings to their respective roles.
For example, to be effective in their roles today, chief marketing officers (CMOs) must be able to shift away from traditional mass marketing strategies, and adapt targeted and data-driven marketing.
Chief human resources officers (CHROs) could also leverage technology in their roles by implementing online HR systems that facilitate employee self-service capabilities, and leveraging data in their talent management strategy through HR data analytics systems.
From this, we can see that technological savvy amongst the C-Suite is key if a business is to realise the full potential of digital transformation. And as the CFO of your business, it falls to you to cultivate that savvy amongst your fellow C-suite executives.
But how can you do this? By cultivating strong internal relationships between your fellow C-suite executives, and positioning yourself as a leader who can garner support behind any tough business decisions that has to be made.
This is possible because, in your role, you as the CFO are the gatekeeper of the data needed for strategic business planning and analysis. This means you have a central role in conducting the cost-benefit analysis for any investments your business makes in new technology, and in identifying growth areas and opportunities that your business can capitalise on with a digital transformation effort.
But you can’t do it alone, which is why building strong relationships with your fellow C-suite executives is so important. You’ll need their support and backing if you wish to convince them of the necessity for pursuing a digital transformation strategy, especially if your colleagues are already technologically savvy enough to see the potential benefits from such a course of action.
Building a good working relationship with your CEO is especially important in this regard, for you’ll need to rely on your CEO’s ability to articulate the case for change across the whole business, communicate a forward-looking digital transformation strategy to all stakeholders, and obtain buy-in from them at all levels within the business.
Why CFOs Should Build A Strong Relationship With Their CIOs
When it comes to driving digital transformation within your businesses, one of the most important fellow C-suite executive you can build a relationship with is the chief information officer (CIO).
That might go without saying, seeing as how CIOs have always been the resident experts in the opportunities and limitations that new technologies bring the table. But these days, in the wake of the COVID-19 pandemic, they’re also seen as the natural leader to drive digital transformation efforts throughout the entire business.
With businesses increasingly moving to a hybrid work model in the aftermath of the pandemic, corporate spending on public cloud services to enable employees to work from home (WFH) is expected to rise to US$495 billion, according to Gartner.
This, plus inflation and rising costs are putting pressure on businesses’ profit margins, which means it’s even more important for CFOs and CIOs to work together to ensure their IT and tech investments are paying off.
Because of this, when it comes to driving digital transformation within your business, it’s especially important that CFOs like yourself cultivate a good working relationship with your CIOs.
In fact, it’s proven that businesses where CFOs and CIOs foster good working relationships tend to achieve better outcomes on digital transformation initiatives. That’s because businesses with strong CFO-CIO partnerships are 51% more likely to find funding for them, 39% more likely to keep spending on these initiatives within budget, and 18% more likely to achieve the desired goals of such initiatives.
But despite the proven effectiveness of the CFO-CIO partnership, it’s not easy to establish one in the first place. According to a Gartner survey of 183 executives, only 30% of CFOs and CIOs report a ‘collegial’ and ‘business-centric’ CFO-CIO partnership in their businesses.
This may stem from a disparity in how one side views their level of familiarity in the other side’s field of expertise. 80% of CFOs in the survey say that they understand how financial management needs to adapt to foster digitalisation; a statement which only 55% of CIOs agreed with.
Conversely, 94% of CIOs said they grasped how technology affects corporate financials, but only 62% of CFOs agreed with that statement.
Therefore, CFOs like yourself should build closer working relationships with the CIOs in your businesses, especially when it comes to leading digital transformation initiatives. Working together, such a partnership can ask some of the most important questions;
- Are investments in IT and tech paying off for the business?
- Are these investments providing the return-on-investment (ROI) that was predicted?
- Do the outcomes of these investments meet expectations?
To ensure that your business maintains its agility during future disruptive events like the pandemic, and to emerge from such events stronger than your competition, CFOs like yourself must continue maintaining strong partnerships with your CIOs to ensure that digital transformation efforts continue to bear fruit for your business.
Building Strong Relationships With Your CIOs And The Rest Of The C-suite Is Conducive To Digital Transformation
If your fellow C-suite executives in your business are technologically savvy and know how to leverage technology to their benefit in their respective roles, they’re much more likely to provide buy-in for any digital transformation initiatives you might propose in your capacity as the CFO.
Because of this, it’s crucial that you make an effort to cultivate strong working relationships with your fellow C-suite executives, as advocating for digital transformation initiatives for your business becomes much easier if they’re better equipped to understand how it could benefit them.
It’s especially important that you build a strong working relationship with your CIO, as they’re the most valuable ally you can have in your corner when it comes to bring digital transformation initiatives to fruition.
With a strong CFO-CIO partnership, your business can derive the full potential of digital transformation, and be better positioned to weather future disruptive events on the same scale as the COVID-19 pandemic.
However, to successfully cultivate strong working relationships with the rest of the C-suite, you have to first start with the CEO. That's because the partnership between the CEO and the CFO is usually considered the most critical to the success of your business.
Click on the image below to access Oracle NetSuite's resource containing insights from Rockstar CFO's Jack McCullough on the secrets to a successful CEO/CFO relationship below.
