How the New-Age CFO Can Drive Digital Transformation

CFOs have stepped out from the confines of their roles – from just handling the finance processes to taking strategic business decisions that have an impact on the entire company. The pandemic has been a trigger no doubt as boardroom discussions now revolve even more around cutting down on operational costs and saving funds to maintain liquidity. Needless to say, finance officers are expected to deliver new levels of business acumen in their organizations, which often pose ample challenges as well as open new windows of opportunities for them.

In an exclusive interaction with CXOToday, Mankiran Chowhan, Managing Director – Indian Subcontinent, SAP Concur, discusses how the new-age CFO can exploit the latest technologies to drive digital transformation and serve as the innovator in their business.

CXOToday: Digital technology is transforming the finance function and changing the way financial professionals are doing their jobs. How have CFOs adapted to these changes?

Most finance leaders that we are speaking to today are presently working through what recovery will look like rather than focusing on growth and are determining how to evolve their organizations to meet the newly urgent strategic priorities even as they remain focused on the fundamentals. So, as they shape their organisations’ new normal, it’s more important than ever to look for ways to create leaner operations, while getting more control over costs so that they can effectively adapt, re-establish momentum, and keep business moving forward.

Digital transformation remains a primary focus for most CFOs even as remediation actions are taken to reduce costs or take advantage of pandemic related revenue opportunities. Having control over costs, cash flow, and compliance has increased the need for having visibility to spend to enable data led decision-making. This is to ensure that CFOs provide timely, accurate and actionable answers to the ever-changing business environment. Additionally, the need of the hour is the criticality of ensuring employee productivity while balancing employee experience and morale. This is expected to undergo a fundamental change by use of intelligent technologies like artificial intelligence (AI), machine learning, and natural language processing that can help to automate capture and processing of end to end spend enabling improvement in productivity and experience. Finance leaders should look at ways to empower their teams with the right technologies so that they can focus on enhanced cost and profitability reporting, rolling forecasts, and zero-based budgeting, Policy formulation and shift from preparation of data to being more proactive and insightful. That’s where the role of robotics and machine learning comes into the picture – these will take over more back-office operations in areas such as Accounts Payable (AP) and Accounts Receivable (AR) and Accountants using spreadsheets will be replaced by technology that does 90% of the work without human intervention.

As we prepare for virtual work from anywhere scenario’s – we have to test each of our current processes against that yardstick – manual clunky paper led processes vs. consumer grade tools like  using a mobile to take pictures of the receipts and complete expense requests on laptops or mobile devices that will speed up the process for employees and simplify things for your approvers. Connected, powerful and integrated end-end spend management solutions is what will power an Intelligent enterprise that can help in financial discipline, so you can strengthen control over spending and create a resilient, sustainable cost structure.

CXOToday: How is the new post-COVID-19 scenario bringing new challenges to the CFO and his team?

You’ll all agree that Cash flow and liquidity is ruling all the decisions that businesses are taking today, however, managing cash on hand requires visibility into what’s going out the door. According to a recent survey, 61% finance executives reported lack of visibility into cash flow as a major challenge. So keeping an eye on spending is more of a challenge than ever; employees have more ways to spend and with the current remote working environment, issues like data-entry errors, processing mishaps, late or incorrect payments, and employees’ mistakes and fraud can have a significant impact on the bottom line.The finance function has been faced with challenges like lack of real time insights on all spend categories leading to lack of intelligence to make informed decisions such as reducing variable costs that can immediately reduce cash outflows.

A recent SAP Concur commissioned survey with The Economist Group concludes that 88% of senior finance executives said that the pandemic will forever change how businesses operate and that they are facing a starkly different economic climate even in the fourth quarter of 2020 than they or their teams had originally anticipated. Nine out of 10 executives agreed that maintaining organizational agility is the only way to navigate uncertainty. While they are confident of their organizations’ capabilities in areas such as emerging technology and managing regulatory compliance, as compared to their peers, they worry about under-performance in tackling costs, revenue growth and operational agility. This relatively lower level of confidence is telling because it is often through operational agility that companies are able to both bring discipline to their spending and quickly make the strategic pivots that lead to revenue growth.

The key challenge for the CFO and his team would be to stay resilient to any unexpected circumstances in the post Covid scenario. Complete visibility into costs and control over how the business’s funds are spent are imperative to create the operational agility needed for business continuity. Without visibility and the tools to act, it’s difficult to know where to best direct funds to stabilize and thrive in these new circumstances. It can be summarized in three key points:

1. Cost Control to manage cash flows – the fuel needed for business to run
2. Improve compliance with spend policies –discretionary spending is focused on what is essential for the given business situation
3. Maximize savings – Preserve the cash and gain the agility to take advantage of new opportunities
4. Managing processes with a remote workforce- the need to eliminate manual, paper-based processes

CXOToday: CFOs are donning multiple hats as they play a key role in performance management, technology strategy, and talent development. How do you see this transition?

The world is going through an unprecedented scenario and companies across industries are gearing up to maintain the health of their business. Finance leaders are becoming more involved in their firm’s growth strategy through strategic decisions and collaboration with different departments. This transition of the CFO’s role needs to be assisted with technology and digital tools. Intelligent spend management solutions can help finance leaders in gaining a holistic view of the company’s finances, manage budget, forecast efficiently and redirect money towards priority areas. Digital tools can help in automating several tasks, integrate processes and data to help CFOs with strategic insights.

Fundamentally, when you integrate and digitalize your spend and vendor invoice processing, you improve business agility by enabling your business to respond faster to change for example, by pivoting and redirecting employee spend to ensure the best outcomes. And by eliminating costly, repetitive, error-prone work using intelligent automation, you can empower your people to do more with less. For example, accounting and finance teams see an average time savings of 15%-16% for after automation of T&E/ Invoice management – These savings alone can potentially save hundreds of thousands of dollars per year – money that can go toward hiring more people, investing in new assets, developing new offerings, and more.

According to Forrester, 75% of companies with a unified finance and IT strategy report much higher levels of satisfaction with travel, expense and invoice management tools than those without one. The more the finance and IT teams can work together to standardise, simplify, connect and automate systems and processes, the more they can help drive the transparency and control needed for organisations to succeed today. With limited budgets and need for tangible returns in the current scenario, CFOs would be heavily involved in the cost analysis and decision for the technology being adopted.

With regards to talent development, while organizations are uncovering best practices, they are realizing that digital is creating a skill disconnect.  Re-skilling the teams or hiring based on new business requirements will be key now. The new re-skilled finance teams can now focus on strategic decision making that drives revenue creation or cost optimization. The need is to empower them so that they can focus on enhanced cost and profitability reporting, business model transformation and revenue & expenditure forecasting.

CXOToday:  How can CFOs transform themselves and their functions in the post COVID era?

The hit to company revenues during the pandemic reinforced the need for transparency. Because if you want your business to remain viable, spending must be visible.

So, when CFOs look at transformation across the finance function, having a connected, powerful and integrated end-end process is critical and this is what powers an Intelligent enterprise. It helps with financial discipline, so you can strengthen control over spending and create a resilient, sustainable cost structure.  So, the 2 recommendations that I have here are:

1. Drive a focus on employee productivity, flexibility and experience – we need to bring consistent & automatic controls to every category of spending based on what’s proven to work best for businesses in your industry and integrate solutions that allow you to control costs before they hit your budget. Technology solutions can help you direct the right type of spending to the right payment method and through the right process, while catching out-of-policy spend.
2. Get True Visibility into Spending by adoption of future ready technology for instance using Artificial intelligence and machine learning powered audit services to ensure spending policies are being followed consistently so that you can isolate trends and patterns that bring down compliance, enabling you to strengthen your policy to increase control.Its very important to understand that Oversight can’t be an afterthought. True visibility and governance should be built into your processes so that it automatically drives the behaviors of employees and in turn provides you with the necessary controls where required.

Additionally, when you look at ROI, it’s important for CFOs to look at building scale, not scope, into cost structure to achieve long-term revenue growth, long-term cost reduction while simultaneously balancing short-term growth and margin expansion. A resilient enterprise that is built on smart technology gives you better and more control over every aspect of spending, from more efficient processes to improved data insights for better decision-making. Also, you shouldn’t lose sight of the long-term benefits that financial transformation can afford.