Gartner Recommended – Five-Step Guide For CFOs To Achieve Digital Finance in 2022

Introduction

The present economy demands CFOs to deliver an agile and efficient finance function that focuses on improving the cash flow. To achieve this, you need to leverage digital initiatives and support your team by providing access to the right information and the right tool.

With the world entering a period of significant transformations for finance, CFOs are met with a new challenge today. It is difficult for them to choose from the latest stack of digital innovations and align it with their priorities for 2022 of driving operational efficiencies across the finance operations.

In this blog, we have identified the five things finance executives must do to accelerate the digital mindset across the finance team and digitally transform the entire finance function. This is based on the recent study conducted by Gartner with over 300 global CFOs and finance leaders across industries.

1. Align digital strategies and business outcomes

The pulse today: To keep up with their peers, finance executives have grown more appreciative of the upcoming digital innovations in the market today. As per the Gartner survey, 69% of the CFOs claimed the evolving business dynamics accelerated their digital initiatives. Many expect technology to lead to a substantial or total transformation in their finance function by 2026.

What it implies: The pandemic has exposed a different customer behavior across industries – whether that’s good different or bad, that’s something which is yet to be determined.

Next Steps for Finance Execs: CFOs are critical enablers of these enterprise ambitions. They should work with finance leaders to optimize the business model to account for the new-age customer.

2. Design flexible budgeting to fund digital growth

The pulse today: The Gartner study reveals 64% of the finance execs expect to use the changing business environment as an opportunity to focus on redesigning their businesses in 2021. CFOs are looking to set their organizations up for financial success in 2022 and beyond, and their top priority is to fund new (or existing) growth.

Planning and budgeting activities are historically conducted by finance executives annually in most organizations. But the volatile new economy demands this to be taken up on a more frequent basis.

What it implies: Budget constraints imposed by national financial authorities disrupt the ability of CFOs and finance leaders to pivot and capture new opportunities. Finance executives need a fresh perspective to evaluate costs and growth opportunities.

Next Steps for Finance Execs: These executives need to be clear on their business priorities and realign the budget to support the finance function. Instead of prioritizing investments based on external factors like what their peers are doing, they should focus on investments that make a significant difference.

Taking the differentiating approach that aligns the digital growth with the new business models will help keep the organization focused on costs. They should identify the cost categories (labor, utilities, and marketing expenses) that need to be considered to update the contingency budgets. Additionally, they should also identify new metrics to evaluate the potential of these digital initiatives.

3. Invest in value-driven finance technology

The pulse today:  Finance operations in most organizations continue to run on technology that has grown old. This doesn’t allow the function to reach its full potential. The Gartner study claims that less than one-third of CFOs are confident that their technologies are aligned with their requirements for ensuring the future success of the finance function.

What it implies:  Finance leaders need to invest in technology that can help elevate transactional teams like accounts receivable (A/R) to move to more strategic decision-making roles – all of this while reducing costs. This requires them to move from Robotic Process Automation (RPA) bots as a tool and leverage more advanced technologies like Artificial Intelligence (AI).

Next Steps for Finance Execs: RPA is limited by its adherence to rigid rules, and it can’t execute decision-oriented tasks. By adding Artificial Intelligence (AI), RPA can be used for more complex activities, such as prioritizing, strategizing, and forecasting. This will allow the A/R teams to shift their bandwidth on more high-impact tasks and create working capital impact.

These next-generation technologies can also process complex or unstructured data, forecast short and long-term cash positions, and learn about customer behavior based on their buying patterns. All of this with minimal human intervention – giving more room for the team to focus on making informed decisions.

4. Deploy data and analytics insights for informed decision-making

The pulse today: Most finance teams (including A/R) complain about having insufficient technical or domain expertise to perform complex data analysis. The Gartner survey reveals that 84% of the executives, on average, stated they expect to spend more time towards this initiative.

What it implies: The finance function is challenged with generating insights that finance executives can use to make data-driven decisions.

Next Steps for Finance Execs: These executives need to consider investing in an advanced data-analytics solution that collects good-quality data from different sources, integrates it into their existing system, and minimizes human errors in transactional A/R processes as much as possible.