Sometimes CFOs are on the outside looking in when it comes to technology decisions. It does not always have to be this way.
Here are the five questions CFOs should be asking themselves when it comes to making technology decisions.
- How should CFOs be thinking about technology investments now versus 18 months ago?
Despite all that has unfolded since the start of the COVID-19 pandemic, certain investment decisions have remained relatively constant. After all, companies’ mission statements do not change because of disruption.
The foundation of technology investment decisions has not changed, the priorities have shifted. There are countless stories about teams pressing pause on certain projects due to uncertainty.
When it comes to adapting to these changes, CFOs should capitalise on the pause in normalcy to reframe their problems, understand the ROI associated with technology decisions, and, when ready, hit resume.
In many instances, the shift to remote work forced a major acceleration in technology adoption. CFOs must support those decisions where relevant. Perhaps even more critically, it is key that CFOs ensure that their businesses’ finance function is not left in the technological past while other functional areas advance.
- What metrics/KPIs should CFOs be focused on when making technology decisions?
Perhaps unsurprisingly, return on investment (ROI) should be every CFO’s north star when it comes to making technology decisions. ROI, however, can take on different forms depending on what organisations prioritise.
There are value assessments that are easier to measure, such as top and bottom-line revenue impact or improvements in the cycle time for monthly and quarterly close. Other elements of ROI are a little more nuanced, such as process efficiency, time saved from manual tasks or even employee satisfaction.
Regardless of the specific metrics used to get a more holistic picture of ROI, CFOs should take a macro-level view of their investment decisions. Leaders should be focused on the 3-to-5-year total cost of ownership, not just the initial implementation fee when determining the total scope of investment.
- How should CFOs be thinking about cloud in the context of their larger technology strategy?
There has been an unprecedented move to the cloud over the past year. Some businesses always planned to migrate to the cloud, while other firms were physically separated from their on-premises systems and had little choice but to switch over the past year. Regardless of the reason, CFOs should embrace the cloud and take stock of its potential.
Business leaders may tend to think of the cloud as an applications strategy, but a comprehensive cloud strategy is much bigger than that. The CFO's role is to understand and then convey to the rest of the organisation that such decisions are part of broader, end-to-end process value chains. A connected cloud experience, whether hybrid or hosted, captures all the interactions that a business makes with its stakeholders, both internal and external.
For example, a point-of-sale purchase may seem inconsequential to most CFOs, but when looking at that POS interaction as a node on the end-to-end value chain, they can start to understand how that single moment can have an impact on the quarterly income statement. When thinking about cloud strategy, it is key to remember that front office and back-office activities live in the same universe.
- Should CFOs still pursue larger transformations or make incremental investments? If so, what is the CFO’s role in managing this change?
As discussed previously, investment decisions often turn back to a discussion about ROI. Once again, it is important to view an investment from a longer time horizon – understanding the 3-to-5-year total cost of ownership. This is often an error made when executive teams evaluate a series of incremental point solutions; the initial sticker price may be cheaper, but teams would have realised a more significant ROI if they had undertaken a larger project.
The CFO can steer the ship when making such decisions. As an information broker and connection point between different executives, CFOs are uniquely poised to make the case for change. They can justify the financial impact of an investment, drive alignment and lead the charge in the implementation. In smaller companies, IT can sometimes fall under the CFO’s jurisdiction, highlighting yet another way these executives have a special ability to improve collaboration.
- Do CFOs need to be focused on digital customer experience?
While they are often oversimplified and portrayed as the “Numbers Guys,” CFOs are truly some of the most competent knowledge brokers in any given organization. They have their hands in many different pots, and as a result, have a profound understanding of the business value chain.
If CFOs are not leveraging that connectedness to be involved in the customer experience discussion, that should change.
CFOs must understand their company’s entire network of stakeholders, and customers should be included in that matrix. After all, to achieve the status of being a customer-obsessed company, all relevant executives must be thinking about digital customer experiences (CX). That focus on customer experience can even be translated into a financial metric in the form of customer lifetime value (CLV).
If you are not currently involved in the CX discussion as a CFO, the best place to start is to leverage your position as an insight broker. Ask what metrics are needed to inform CX-related decisions and proceed from there. Next, try to form a deeper connection with your customer base. Can you connect with them through meetings or site visits? Can you consume your product yourself so that you can see things from your customer's shoes? All of these are ways that CFOs can shift their focus to the digital customer experience if it isn’t there already.
There are a few key themes that span across more than one of these questions that all CFOs stand to benefit from when it comes to thinking about technology decisions in the future.
Do not operate in silos.
Teams work most effectively and make the most efficient decisions when they collaborate. CFOs should embrace their roles as knowledge brokers and harness the ability to connect disparate parts of their organisations.
Take a holistic approach to your technology decisions. Find competitive advantage when you can and think longer term. When making changes, you do not want to have to restart the process in just a couple of years. Consider an investment in technology on a 5-year scale, both for feature requirements and capital requirements.
Educate yourself. While 2020 was a year like no other, certain elements of the past will carry on with us well into our collective futures. This is especially the case in the world of software and technology infrastructure.
Tech literacy is going to be an assumed trait as we navigate back into normalcy. CFOs should go out and find their footing, even if that means finding time to connect more with customers to get a better picture of the entire experience.
This article is based on a recent roundtable discussion presented by the CFO Leadership Council with NetSuite to share ideas on how CFOs can be drivers of major technological change within their organisations.