Effective CFO involvement can lead to improved business outcomes and performance improvements across departments.
CFOs and solid financial functioning can help companies successfully navigate toward full transformation, add value, and lead to improvement.
What is Business Process Transformation?
Business Process Transformation is the concept of initiating changes in management strategy with the goal of aligning three components—people, processes, and technology—across a wide range of different departments.
How to Know When to Undergo a Business Process Transformation?
A Business Process Transformation is a rather lengthy and thorough process that must be planned well and implemented step-by-step. So, when would you know if you need to undergo this process?
Ask yourself these 3 questions:
- Is the company reinvesting in opportunities?
- Is the company’s performance superior to that of major competitors?
- Is the company’s competitive advantage strong enough to leverage more customers and more business from existing customers?
If the answers to even one of these questions is doubtful, it could be time to change your approach. A business process transformation will help support innovative business strategies. There are many advantages to undergoing such a transformation:
- Streamlined processes
- Improved efficiency
- Productivity improvements along with stronger financial and process controls
- Development of reenergized leadership
- Improved customer service and increased profitability
- Clear understanding of competition and the ability to adopt leading industry practices
With these advantages come a set of risks that shouldn’t be overlooked:
- It’s like starting your business all over again, which means a ton of research, implementation, and strategy.
- Technologies need to be upgraded to provide scope for transformation.
- Business transformation needs continuous innovation, so a constant change of the business model is essential.
This is where the CFO comes in. A CFO has a very comprehensive and central role in the whole process of undergoing a business transformation. CFO involvement can lead to better outcomes for organization-wide performance improvements.
Key Roles that a CFO Plays in the Entire Process
#1. Establishing a Clear Financial Baseline
A transformation can be an expensive endeavour. As stated before, it is almost like starting a business from scratch. A CFO must set a baseline and a ceiling for spending. While setting up spending limits sounds like a simple dynamic, it is often misunderstood and poorly communicated, so CFOs must make clear calculations while keeping various aspects of a business in mind.
#2. Clarifying which Initiatives Create Value
Given the volume of initiatives involved in setting up an entirely new business process and the limited time and resources available, managers often find it challenging to prioritize tasks. It is important to focus more on the tasks that have the most impact. Prioritizing tasks is key to a successful transformation.
#3. Ensuring that Benefits Fall to the Bottom Line
In today’s day and age, CFOs are responsible for much more than finance. According to a McKinsey report, five functions other than finance now report to the CFO on average. More than half of the CFOs surveyed said their companies’ risk, regulatory compliance, and M&A transactions and execution report directly to them. Additionally, 38% of CFOs surveyed were responsible for IT. Some CFOs even managed cyber security and digitization, suggesting just how diverse the list of demands on the CFO are. Therefore, a CFO has a wide-ranging role in the process of transformation.