CFO's road map to optimizing the finance function using technology
Modernizing finance for the modern, middle market CFO
TECHNOLOGY BULLETIN |
The role and range of influence of middle market chief financial officers (CFOs) within their organizations is significant and continuously evolving, and typically includes factors with broad reaching significance such as regulations, globalization and innovation. Companies are affected by this shift in many ways, and a number of technology solutions can assist CFOs to better control and manage their broadened role.
The challenges facing CFOs are numerous and complex. From a regulatory perspective, CFOs are required to manage regulations around finance, labor and contracts, tax laws, and risk management. The new Trump administration brings uncertainty with the potential for many new guidelines revolving around tax laws and financial accounting regulations that may have a significant impact on middle market organizations.
In addition to regulatory concerns, the global economy is having a greater influence on the operation of middle market organizations. In the recent past, globalization and the impact of operating an organization on a global basis was only applicable to large organizations. In today’s environment, even middle market companies need to operate on a global basis to remain competitive.
This increased complexity puts great strain on most finance organizations and requires middle market CFOs to perform more effectively and leverage tools that can accommodate operating a global organization with speed and efficiency. Rapidly evolving technology innovations can enable CFOs to manage globally and drive efficiency and productivity throughout the organization. These modern technologies used to be available and affordable only to large multinational enterprises—today, these technologies are much more attainable for middle market organizations.
A recent CFO article stated that “finance professionals see the rising wave of digitization and automation as the key to their ability to partner with the business to manage performance.”1 With the evolution of the CFO role from traditional revenue tracking and controlling associated with accounting and finance to more enterprise-wide strategic planning and management focused on increasing business value and growth, CFOs can leverage new disruptive technology tools in two key ways:
- Connecting operations, departments, functions and individuals in real time across the enterprise, providing critical visibility and access to critical data
- Enabling more sophisticated levels of data collection and analysis, providing actionable insights to grow the organization and develop a competitive advantage
Technology as an enabler for CFO success
Several existing and emerging technology applications can enhance value within the finance function and other key areas of the business, helping to further elevate the CFO as a leader within middle market organizations. Many finance leaders recognize the need to take advantage of these advanced technologies for stronger financial processes and analytics, but many do not understand which innovations are attainable for organizations that need to closely manage their resources.
CFO’s survey indicated that 93 percent of senior finance executives believe that CFOs will need a much stronger technology skillset, and 80 percent plan to upgrade technology skills in the coming year.2 Investments in technology to increase productivity and efficiency through simplification and automation of processes are not only viable, but critical elements of many middle market organization’s financial strategies.
Traditional technology platforms
Many middle market organizations leverage an enterprise resource planning (ERP) platform to connect and manage the business across the entire enterprise. These traditional ERP solutions are evolving, as traditional on-premise ERP systems are losing ground to the increasing functionality of cloud-based solutions. These solutions have provided middle market organizations with a strong platform to measure and monitor the business and provide improved functionality focused on driving efficiencies and cost savings across the organization.
In today’s dynamic business environment, many middle market CFOs still believe that there is room for improvement in their ERP platforms, specifically related to reporting and analysis capabilities, customization, integration, ease of implementation, and user friendliness.3 CFOs also believe that the prevalence of mobile technology can improve the performance of middle market finance organizations through delivering on-demand reporting and timely analytics to help make more informed business decisions.
CFO game changers
While ERP systems, mobility and cloud applications are extremely beneficial and arguably essential for today’s CFOs, several emerging technology platforms can provide enhanced data visibility and analytics capabilities to gain a competitive advantage.
For starters, big data initiatives are a significant tool to help the finance organization mine through and discover actionable insights from the volumes of information that all organizations now possess. CFOs must be involved in data management and governance initiatives in order to better understand the information available to their organization and how it can be analyzed and utilized to implement actionable strategies to drive organizational performance.
For example, implementing an effective big data platform can enable a CFO to identify behavioral patterns and trends, and predict future behavior by internal employees, customers and partners. This information can be utilized to establish internal controls over key information and processes, and create a mechanism for industry comparisons to ultimately enhance an organization’s operational performance. Big data can be utilized to drive organizational change by bringing clarity to complex information and a more comprehensive view of organizational analytics that can strengthen business processes.
Recent data shows that finance executives have increasing involvement with data analysis, with CFOs in charge of analytics at 18 percent of companies, coming second only to the division head.4 With that in mind, finance leaders should assess the potential of both predictive and cognitive analytics within their organizations. Predictive analytics forecasts potential outcomes and risks using existing data trends and real-time information, while cognitive analytics adds additional learning capabilities to enable more efficient data analysis and enhance decision-making.
To further harness the power of big data, financial organizations can leverage data visualization technologies to present complex information in a format that users can better understand. It helps the organization analyze key metrics and trends, and determine new financial drivers. In addition, data visualization can help CFOs develop compelling insights and direction to stakeholders outside the finance function.
Finance organizations are also turning to analytical tools to increase the speed of reporting and dissemination of information to the business. Many emerging technologies can enable middle market CFOs to make sense of vast amounts of data, and translate it into actionable information that the organization can use to make informed business decisions. These technologies have allowed leading middle market CFOs to expand their responsibilities and drive significant value for their organizations through initiatives around advanced analytics, business intelligence, and more comprehensive and robust financial forecasting.
As CFOs gain greater responsibilities and financial demands become more complex, several technology tools can increase visibility and efficiency while enhancing analytical capabilities. Finance organizations must be technology savvy and leverage innovation to drive strategic initiatives based on enhanced data insight and analysis. Understanding available options and developing a technology road map that takes advantage of emerging solutions can transform many key processes and create a platform for more effective decision-making and ultimately, improved organizational performance.
1. “The Digital CFO: From ERP Systems to Smartphone Apps, Information Technology Is Reshaping the Role of the Chief Financial Officer,” CFO.com, accessed Jan. 18, 2017.
2. “The Digital CFO.”
3. “The Digital CFO.”
4. “Top Trends in Finance 2016,” Innovation Enterprise, Jan. 18, 2017,