Make digital savviness a finance leader priority

Digital technology is rapidly changing the way the world does business. All too often, however, the finance functions in organisations are slow to adopt new technologies.

Forward-thinking and digitally savvy finance leaders are transforming their business models and gaining a competitive advantage, leaving behind people who are still tied to legacy systems and the old ways of doing things.

“It is not just about adopting the bits and bytes of technology, it’s the mindset and the thinking,” said Joe Dettmann, principal of EY’s People Advisory Services.

Dettmann recently co-authored Global Leadership Forecast 2018, a collaboration between DDI (Development Dimensions International), The Conference Board, and EY.

“What we found is that so many leaders are catching up and are not prepared for digital fluency,” Dettmann said.

Digital-savvy leaders are using data and analytics to guide their decision-making, which makes them better at navigating complexity, and anticipating and responding to changes in the market, he said.

“Many finance processes, about 65%, are manual so can easily be automated,” Dettmann said. “Now, you can either take the dystopian view that technology is taking finance jobs, or you can see the opportunity in getting people to do other tasks that drive the business forward.”

Gordon Barrie, FCMA, CGMA, a consultant and business mentor at Barrie Associates, said digital technology could put an end to the traditional organisation design.

“Agility equals integration,” Barrie said. “Companies tend to focus digital investment on the front end, the consumer interface, but you have to integrate IT, finance, and digital departments, because the consumer interface, the value chain, business information, and data are now all part of finance decisions.”

One example is the way digitally savvy finance leaders are using tools such as Google Analytics to track consumers’ purchasing behaviour, enabling them to determine the desirability of products, the correct pricing, and the geographics, socio-demographics, and lifestyles of the purchaser.

“Management accountants in digital front-end businesses are now data mining with Google Analytics reporting and analysis,” Barrie said. “So, the management accounting toolkit and day-to-day work is changing rapidly with the shift to online.”

For finance leaders who want to become more digitally savvy, both men offer a number of tips.

Digital acumen. Finance leaders need to learn a new digital technology capability set, which means they must also understand current and emerging technologies, whether it is data analytics, the internet of things, or blockchain, and identify how this technology could affect the business, not just today, but also how it can affect the business tomorrow.

“The only way CFOs can do it is immerse themselves in this stuff completely,” Barrie said. “And that may mean a disproportionate amount of time away from finance functions.”

Leadership. For those finance leaders not up to speed with digital technology, all is not lost. By conducting a digital capability assessment of people in an organisation, leaders can help identify digitally savvy talent.

“We are seeing many organisations fast-track the younger generation into finance functions because they are often so much better at this sort of thing as they have grown up with it,” Dettmann said.

He said that finance leaders can take advantage of this pool of younger talent by using “reverse mentor” programmes, where younger, digitally savvy employees assist finance leaders in aspects of digital technology.

Adaptability. Change has to be negotiated quickly. Digital technology means finance leaders have to be agile and make changes as new technologies and new opportunities emerge.

“Traditionally, finance tends to be risk averse, so there needs to be more of a risk tolerance,” Dettmann said. “I’m not saying finance leaders should take bold gambles, but the way they operate should be more agile and more innovative.”

“There is a much faster cycle time now, and that means you have to move fast,” added Barrie.

Commercial opportunities. Finance leaders also need to understand the commercial opportunities that digital technology brings. This includes how to make money from digital technologies and exploring how different relationships connected to the businesses interact with it.

“Finance leaders need to understand everything about the digital commercial model — vendor management, processes, finances, contracts, risks, what good quality is, etc.,” Barrie said.

“Being a good finance leader is about strong, stable stewardship,” he added. “They need to understand the technology, understand the faster cycle, and adapt to add value to the business.”

— Richard N. Williams is a freelance writer based in the UK. To comment on this article or to suggest an idea for another article, contact Sabine Vollmer, an FM magazine senior editor, at Sabine.Vollmer@aicpa-cima.com.