Digital finance transformation lets CFOs shift focus to value

Like most corporate departments, the CFO office is not immune to the pressures to use digital technologies to transform its own business processes and, potentially, those of an entire organization.

"Digital finance transformation is happening," said Ash Noah, vice president of Chartered Global Management Accountant (CGMA) external relations for the Association of International Certified Professional Accountants. "There has been an era of transformation where CFOs have been paying attention to the efficiency factor. But now it's time to start addressing the effectiveness factor."

Noah explained that the initial focus of digital finance transformation has been about cost reduction and process efficiency, but the shift to effectiveness is about the value lens, or ways to increase the value of intangibles, such as customer satisfaction. While most of the cost efficiencies have been found, newer technologies such as robotic process automation (RPA) are further reducing costs.

"Really, what automation and digitization is doing is making finance a more effective business partner," he said. The focus of the CFO is shifting now to provide more effective business guidance.

Noah made these comments during a podcast recorded after he moderated a panel on digital finance transformation at the MIT Sloan CFO Summit, which was held last week in Newton, Mass.

RPA is one of the important emerging technologies enabling digital finance transformation, according to Noah. It addresses finance tasks that are repeatable and predictable.

"Finance used to spend a lot of time pulling data together from various sources, and that needed to be done manually," he said.

Robotics helps to pull data that is key to decision-making from legacy systems, then moving it to data lakes that populate data warehouses where analytics can be performed.

In this second major phase of digital finance transformation, much of the value that CFOs now focus on comes from better analytics.

"Finance is spending less time on assembling data, less time on producing reports and is actually getting more time to spend on analysis. And it's that business analysis which produces the business insights which really drives value for the organization," Noah said. "What you end up with is smart finance factories."

Other topics discussed in the podcast include the financial processes, such as order to cash, that show the quickest ROI using automation; the value of moving enterprise data to the cloud to enable higher-value advanced analytics; and the impact of AI and machine learning. By marshaling this array of technologies for digital finance transformation, a CFO can become the value architect rather than just a provider of information, he said.

Noah, part of whose job is to promote the organization's certification process for the CGMA designation, is a certified public accountant and CGMA. Previously, he was CEO of MergeCo International, a mergers and acquisitions advisory firm, and CFO of TNT Express, a logistics provider.