Challenges CFOs Face in a Digital World
In a digital business environment, businesses must keep up with rapidly changing technology to survive the competition. Indeed, a research by HFS Research shows that a business is likely to become more profitable than the competition within two years of a digital transformation. As much as digitization brings on numerous benefits, the dynamic changes present a challenge for CFOs in balancing risk management, resource management and operations.
The biggest challenge for CFOs in digital transformation is that they are mostly out of depth in this field. CFOs are often multi-talented but quickly realise that subjects like social mentions, server uptime, cloud hosting, blockchain and so on are beyond their grasp. They are forced to rely on IT experts who may not communicate clearly what is needed. The CFO will feel like he is making a decision based on incomplete data.
Adaptability of digital resources to business needs will be a challenge when skills are lacking. The CFO will find it hard putting technology to use in assessing performance metrics, customer data and guarding intellectual property if he is not familiar with these technologies.
For the CFO, technology and finance issues are inseparable. Digital transformation requires money and human resources. There are systems to put in place, staff, to hire to run the systems, and retraining of staff using the systems.
The rapid obsolescence of digital technology is a headache for CFOs as regular replacement of technologies can eat into the business’ resources.
Digital transformation requires talent. The CFO as a driver of strategy is tasked with looking at what talent will be needed to drive this strategy. As much as the HR department is tasked with the head hunting, the CFO has to take the lead in identifying what skills will be needed to execute the digital vision that has been laid out.
Retaining talent once it has been acquired is also a challenge. Good IT experts are highly regarded and the CFO has to look for ways to make them stay within reasonable resource demands.
Digital technologies present real risks for the CFO. As the risk manager, he must be in a position to identify areas of risk and know how to mitigate these risks. Data breaches, hacks, data leaks and system failures are some of the risks that can lead to losses in assets, money and intellectual property. There is also the risk that the wrong systems are put in place leading to underemployment of digital resources.