Chief Financial Officers are focusing on a variety of objectives moving into 2020. These objectives are not too shocking, when put into the simplest form, CFOs are looking to increase efficiency, liquidity, and profitability. While these have always been the goals of the finance department every year, the channels they are using to reach them grossly differs from previous years.
Digital transformation is playing a massive role in how we make decisions, find opportunities, visualize performance, and automate tasks for efficiency.
Gartner outlined the top reasons CFOs have looked to implement digital strategies:
79% of financial application buyers sought to improve efficiencies
59% of them targeted better business outcomes
36% thought cost improvement was a reason to upgrade
9% cited driving growth as a factor
Digital strategies can help accomplish CFOs' 2020 goal, but only 21% of CFOs said they are personally focusing on technology and information (source). Here are some of the top reason why companies are not pursuing a digital strategy:
1. Using the wrong metrics
This type of thought process is the “if it ain’t broke, don’t fix it”. While this may be true, it also increases the chances of your performance remaining stagnant. When disruptive technologies are introduced to an industry, it does not just change the performance of individuals, but also changes the benchmarks of the entire industry .If you continue to measure your efficiency and productivity to previous performance or industry metrics, there is a high probability you are overlooking improvements and will fall below the industry standard.
To accurately measure your performance, you need to look at where the industry is going. For example, the automotive industry is making a transition from the gas engine to the electric motor. Years ago companies were competing on the metric of miles per gallon, but with electric cars now in distribution, this metric does not apply to the industry. The metric to measure has begun shifting from miles per gallon to miles per charge. For automotive manufacturers to stay relevant, they need to start producing cars that win in that metric, ex. build electric cars. Companies that do not recognize the shift will surely be left behind.
In order to continually improve and maximize performance, businesses need to continually question what is possible; stop trying to beat their own performance, but instead set unrealistic goals and plan out what technology or processes give them the best chance of accomplishing it.
2. No clear company initiatives
Deciding on new technology is never an easy decision. When there are multiple people and processes in place at an organization, it can be tough to find any application that can plug into your organization without the need for a lengthy implementation. While you have found a great improvement for your department, other departments or individuals may not feel the same because of how it affects their job and/or responsibilities. This turbulence typically leads to companies to abandon top performing solutions due to the change of structure.
This is why you will typically see organizations invest in smaller improvements that cause less turbulence. Programs like invoice automation or credit bureau subscriptions are improvements that are rather silo’ed and do not cause turbulence within the organization and can be quickly implemented.
Sadly, decisions that shy away from turbulence usually sacrifice dramatic performance improvement. To overcome these scenarios, businesses need to have clear financial goals. While many individuals have different items or interests they wish to accomplish , the main company initiative needs to reign supreme. Therefore, the technology allows you to meet or exceed these goals the most should be in the best interest of all employees.
3. No defined problems
People buy products when they have a need. If your business has not recognized a pain point then you are likely not actively looking for a solution. However new technology is solving problems that companies thought were the "status quo."Just because you can’t think of a problem, it doesn’t mean it does not exist.
Today, the fastest-growing job titles are in analyzing and automating vast amounts of data. Many organizations are investing in these roles because when businesses feel a pain point, they have already lost money. Investing in analyzing and automating roles allow businesses to uncover hidden issues before they become a problem, or visually uncover future opportunities or efficiencies to become more competitive.
If you are a business that does not have current pain points, it is not a bad idea to do initial research to see how you could potentially optimize your company through the following categories outlined by McKinsey:
In conclusion, CFOs in 2020 will need to recalibrate their performance metrics and rely on adopting new technologies to increase competitive advantage. Successful technology implementation takes the correct research and thought process to get full buy-in and achieve the highest growth. While these decisions are not always easy to make, your competition is likely already making them.