The increasing scope of the Chief Financial Officer (CFO) role is something we’ve explored extensively on our Finance Channel.
A topic we haven’t discussed is the CFO’s role within Digital Strategy. Enabled by the increasing functionality of new technologies and data extraction techniques, digital has changed the way companies do business.
The assumption that the Chief Digital Officer is the only position that deals with digital is incorrect. For CFOs, digital opens up new avenues to drive shareholder growth and mitigates against organisational risk. To add to this, only a small percentage of Chief Innovation Officers (CINOs), according to a KPMG survey, feel they have the resources to deal with digital disruption going forward.
The same survey showed that most companies aren’t confident that their current leadership structure will be able to deal with the demands of digital disruption. Much of this is concerned with the ‘race for talent' and many industries’ inability to produce it quickly enough. If organizations can attract the right talent, it will be up to them to keep hold of it, a task that’s much easier said than done - and this will be critical to companies which want to produce the best digital content.
According to David Ryerkerk, Ernst and Young’s (EY) global IT advisory leader;
‘The firms that are struggling with this [digital strategies] most are those who see it as predominantly an IT issue, as opposed to a larger, business one.’
This is where the CFO comes in. Although the CIO/CFO relationship has become closer, there are threats to the balance. According to an EY study;
‘Cost discipline, rather than strategic value, still defines the IT investment mindset, and lack of mutual understanding between CFOs and CIOs is still an all too common problem’.
As we move forward, companies will find themselves relying on the relationship between the CINO and the CFO. Both roles play an important part in driving a number of digital initiatives, including analytics programs, which lead to better decision making and a closer relationship with the consumer.
The promise of improved data and analytics is the main reason why CFOs are coming round to the idea of being involved in digital. As with every aspect of modern business, CFOs understand the importance of data in decision making, meaning that they’re happy to collaborate with CDOs.
For companies to reach their digital potential they must incorporate the CFO into their digital strategic planning. The whole company should strive to improve the relationship between the CDO and the CINO and hope that this will reflect in their digital endeavours.