As a CFO, you are busier than ever this year, assessing your organization’s liquidity, optimizing cash reserves and developing what-if scenarios to weather the impacts of the coronavirus crisis. Yet, what about the future after this crisis? Will your role and that of your team be different? We asked Kristof Stouthuysen, professor of management accounting at Vlerick Business School, during his talk at our recent Inspiration Fair in Belgium of which you can download the recording here. Spoiler alert: finance will be more fun!
“CFOs and their teams are working darn hard to help their organizations navigate the corona pandemic. Once this crisis is over, their roles will be just as crucial: they’ll be expected to help their companies thrive in the next normal,” says Kristof. “That next normal will be different, though. More than ever, digitization and high-quality data will be quintessential for the CFO office.” Here are four steps to help you get ready:
Even the most skeptical finance teams will have to admit it: the COVID-19 pandemic has shown that digital is now a basic requirement. Companies that were already working remotely and in the cloud moved smoothly from office to working from home. Those who hadn’t invested in digital collaboration tools yet struggled to get access to all the data remotely, and productivity dropped.
“People don’t change their minds because they see the light, but because they feel the heat,” says Kristof. “That is what we’re seeing right now. The pandemic is a wakeup call: CFOs and the finance organization understand that they have to accelerate the pace of digital transformation. It is not easy, of course, to adopt a transformation mindset while you’re leading your organization through a crisis, cutting expenses, assessing liquidity, conserving cash and developing scenarios. But there’s no return to finance as usual. Technology is a must to work smarter and more efficiently.”
"After the COVID-19 pandemic, there will be no return to finance as usual. Digital is here to stay. Start accelerating the pace of digital transformation."
“Finance has always been data driven, but data was mostly used for traditional responsibilities, like getting the books right, financial reporting, budgeting and a bit of forecasting,” Kristof explains. “Moreover, the finance team uses structured data, which they can neatly insert into an Excel sheet. Yet today there is a massive amount of unstructured data available, from text, images and social media messages to sensor and geographical data. Armed with insights from this data, CFOs can help improve operational decision-making – and hence, the bottom line, by answering questions, such as, ‘which customer is the most profitable?’ or ‘which products will be in high demand next month?’”
“The volume and velocity of data from a number of diverse sources is increasing,” Kristof goes on to say. “So, there is more data than ever, more than enough computing power, and technology such as artificial intelligence (AI) is ready to make connections between data and convert it into real-time decision support. Everything is there for the finance team to generate business value.”
"Data, computing power and technology like AI: it’s all readily available. Start using it to generate sophisticated insights – and add value for your organization."
Finance is traditionally stuck in numbers and figures, validating and reconciling information. Business, sales and marketing remain distant, separate islands for many CFOs and their teams. “I should be careful not to generalize here? More and more CFOs are taking on a more strategic role, but it’s a difficult exercise for them to break out of their silos. In the meantime, the management expects them to predict the future.”
“CFOs should work together with CEOs, CIOs and other department heads to pinpoint opportunities for growth – based on the data and thus insights I mentioned earlier. Of course, they’ll still be taking care of reports and analysis, but on a different scale. That does require a mindset shift, though. CFOs should therefore expand their horizons and strengthen their teams with people that combine a nose for finance with good soft skills and an interest in technology.”
"Digital transformation is also about people. Reach out to other teams and collaborate to become a true business partner."
Unsure where to start? Most of your peers already have, and you can’t risk falling behind. Kristof’s advice: “The transition to digital doesn’t need to be a big bang. Explore the new technologies available, team up with your most tech-savvy colleagues, choose a small pilot project and start experimenting. Go for the quick wins first, as these will help generate enthusiasm among the rest of the team. Step by step, you can then progress from digitizing tasks to embracing the power of data to protect and later create value.”
"Think big, start small: choose a small pilot project and start experimenting. Go for the quick wins first."
Kristof ends with a blunt promise: “Finance teams that start experimenting with data and digital will soon experience that it’s fun to gain new insights, make forecasts and, in this way, help their organizations thrive. Finance will be much more interesting!”
Listen to the insights that Kristof Stouthuysen shared with us during our Inspiration event in Belgium. Check out the 15” recording.
Kristof Stouthuysen has a PhD in applied economic sciences (KU Leuven, Belgium). He currently works as associate professor of Accounting and Control at Vlerick Business School (Belgium), is a part-time professor in Management Accounting at KU Leuven (Belgium) and has been a visiting professor at IESE Business School (Spain). Kristof also established the Centre for Financial Leadership and Digital Transformation at Vlerick Business School – a hub that aims to inspire CFOs and finance leaders around the globe when it comes to embracing new technologies.