06 Sep The digitalization of the finance function
There is a big difference between digitization and digitalization. They sound similar but the subtle difference is crucial for ensuring business success. Digitization is simply the conversion of analog to digital, such as switching a manual ledger to Excel. In this guide, we discuss the digitalization of the finance function.
Digitalization, on the other hand, is how digital technologies and digitized data impacts how work gets done, transforms how customers and companies engage and interact, and creates new (digital) revenue streams. It is the process of creating an environment for digital business, whereby digital information is freely flowing at the core of the business.
This is the crucial intersection between CFO 1.0 and CFO 2 —the latter has embraced the move towards digitalization of their entire business processes. It is not a replacement for the traditional systems but the integration of technology across all areas of a business changing how they operate and delivering value to customers—whether these are internal or external changes.
This is the crucial intersection between the CFO 1.0 and CFO 2 —the latter have embraced the move towards a digitalization of their entire business processes. It is not a replacement for the traditional systems but integration of technology across all areas of a business changing how they operate and deliver value to customers—whether these are internal or external changes.
Digitalization is now a realistic goal for the finance function because of a range of technological advances. These include the widespread availability of business data; teams’ ability to process large sets of data using now-accessible algorithms and analytic methods; and improvements in connectivity tools and platforms, such as cloud computing.
It is the responsibility of CFOs and their teams to be the gatekeepers for the critical data required to generate forecasts and support the CEO’s strategic plans and decisions—among them, customer demand, order fulfilment, supply chains, and cash flow, as well as real-time industry and market statistics.
It’s clear from the CFO 3.0—Digital Transformation Beyond Financial Management report findings, there is more and more demand for real-time data and a digitalization of the finance function. CFOs are increasingly being called upon to provide strategic business counsel. They can’t afford to be focused on the traditional role of simply running the day-to-day business accounts. Competitors who are more innovative and disruptive in their approach will steal a march on companies who fail to adapt to the times.
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