Posted by Bill Gerneglia in Untagged
By Eric Openshaw and Richard Rorem
Chief financial officers face a strategic choice today that could affect their career and their company. Digital technologies are rapidly evolving, converging and becoming C-suite friendly. Will CFOs view them as IT costs to manage or tools requiring a steep learning curve that’s best attempted in close partnership with their chief information officer?
Two companies, FedEx and American Airlines, have benefitted because their CEOs famously learned that lesson. Fred Smith, FedEx chief executive, recognising that continuously improving logistics was essential, forged strategic partnerships with a series of IT leaders in his company, keeping digital innovation central to his business model.
Robert Crandall, his counterpart at American Airlines, worked closely with his IT guru, Max Hooper, supporting him in the creation of their revolutionary reservation system, Sabre. The fact that reservations-only digital forms continue to try to challenge Sabre’s competitive edge is an early lesson in the importance of understanding the speed of digital disruption to an enterprise.
“More IT organisations report to the CFO than to any other executive function or role,” noted Sara Peters, Enterprise Efficiency editor in chief, citing the 2011 Gartner FEI Technology Study. That’s unfortunate for many CIOs because, as Ms Peters reports, “Gartner found that CEOs generally have a higher opinion of the IT organisation than do CFOs, and top executives see IT as potentially having a bigger strategic impact on the business than do CFOs.”
Worse yet: according to the Gartner study, “only 32 per cent of CFOs see the CIO as a strategic partner.”
Yet CFOs who choose to work strategically with their IT leadership can secure faster adoption of four key post-digital tools that can make measurable business improvement. They are enhanced social collaboration ecosystems, analytics, mobility and the cloud.
Core Logic, an early adopter of an enhanced social collaboration ecosystem, has already achieved greater efficiencies. Historically, when finance closed the books,the process involved sequential review and coordination between accounting, tax, business finance and other departments. Communication was traditionally by email and nobody had all the information at one time.
CoreLogic implemented and adopted an enhanced collaboration site where involved parties could see and respond, in real time, to the same information.
What used to take two to three days can now be completed in hours. Similarly, exception-based incidents and processes such as those arising out of an accounts payable or receivable issue can be resolved sooner and often better. Again, that’s because all internal departments can work simultaneously rather than giving input in a linear chain of events where no one can see all the relevant factors at once.
To achieve an effective design of such collaborative systems, it is importantfor the CFO and the CIO to collaborate on creating it, rather than the CFO viewing them simply as expenditures to approve or deny. Such an approach requires deep learning and listening, yet the performance improvements can be significant. They include the capacity for collaborative forecasting, swifter issue resolution, more rapid and customer-centered innovation, and advance fraud tracking.
A close alliance between the CFO and the CIO can also sidestep a main reason for many of the failures experienced by some of the early adopters of social tools for enterprise. That’s the lack of clear goals. Having the big picture of the firm’s needs, the CFO can set the objectives that become the criteria for the CIO to design the post-digital systems. In this way, each partner iteratively learns more about the constraints and opportunities they face as they co-create a strategic path of adoption.
In addition to the enhanced collaboration capacity of the ecosystem we described earlier, other complementary, post-digital technologies are emerging. They, too, can generate performance improvements for the enterprise. They are location-based services, listening and signal capturing, and mobile content creation and delivery.
For example, companies can now automatically tag and track people, products and even activities to create location-based efficiencies and innovation. Such tracking can lift much of the burden off globe trotting employees for recording taxes on travel expenditures. Location-based tracking can also support streamlining many operational, finance and promotional processes. It can also support real time analytics to predict how much to make and to deliver how, when and where.
The CFO can be in the coveted place to make strategic recommendations that transcend “finance” when he or she can couple that location-based capacity with the ability to sense and respond to what customers, suppliers and employers are doing. Complex as the creation of such post-digital systems can be, the upside competitive opportunity makes it alluring to attempt to design, in partnership with an equally savvy IT leader.
And we haven’t even suggested the further benefits of overlaying a mobile capacity to location-based listening and responding. With that full mobile capacity in place, firms could capture and share relevant data between customers, employers, suppliers and other participants in its post-digital ecosystem, optimally making that information available anywhere, any time, and on any device.
The risk of not understanding the capacity of these digital tools is at least as great as the opportunities of knowing enough, in partnership with a strong CIO, to make smarter decisions for their best use.
That leads to two key questions. Will it be the CEO or the CFO in your firm that takes the lead in closely planning digital tool usage with the CIO? Or, will someone on the top leadership team of a competing firm figure out first that a key to achieving their objectives is cultivating a close, mutual learning and planning relationship with the IT leader?
Eric Openshaw is the vice chairman and US Technology, Media & Telecommunications leader at Deloitte.Rich Rorem is a principal with Deloitte Consulting and the US Finance Transformation leader.
Published by FT.com