Digital Transformations Require Closer Working Relationships Between CFOs And CIOs

As part of the digital transformations (DX) that are sweeping through industries on the back of the headwinds of the Fourth Industrial Revolution, chief financial officers must now seek enterprise technology solutions that can provide fast and easy access to real-time financial data, which they can use to make better-informed decisions. As well as ensuring compliance, these tools must give them better access to financial and operational data, with automated alerts and perhaps, capabilities such as scenario planning.

With some 86% of organisations in the region either currently engaged in a DX initiative or about to start one, according to the IDC Middle East CIO Survey 2019, there is an obvious place to start in seeking new technological solutions: a closer bond and working relationship between CFOs and chief information officers (CIO).

The encouraging news for us in the region is that CFOs in Gulf Cooperation Council (GCC) countries are awake to the possibilities of digital transformation and are open to working with their information technology (IT) teams and CIO to unlock the value of digital technology.

It is through partnering with CIOs and by deploying fit-for-purpose business solutions that the CFO can help the organisation grow and thrive during a time when technology and consumer expectations are changing at high speed.

Today, the job of a CFO is to create better financial strategies that align with the needs of the business. They must in effect become strategic partners, empowered with the real-time analytics and insight that digital transformation can bring.

The cloud is a great enabler, allowing CFOs access to real-time data anywhere and anytime. With enterprise cloud solutions now reaching maturity, businesses are turning away from legacy Enterprise Resource Planning (ERP) systems to more flexible and cost-effective solutions powered by the cloud, hybrid version or even on-premise.

It will be interesting to see how the need for this tighter working relationship between CFOs and CIOs depends on the sector in which a company operates. For instance, based on the data collated from the 2019 IDC CIO Summit Survey, while governments in the region have been at the forefront of DX for several years, the number of DX projects in the private sector are now multiplying.

In the manufacturing, agriculture, retail and wholesale, and logistics and distribution sectors, digital transformations are witnessing a momentous upswell and having a direct impact on how private sector organisations are deploying the by-products of 4IR to achieve two imperatives: redefining customer experience and enabling operational efficiency.

In the manufacturing space, company heads are using real-time data in combination with historical data to anticipate when a machine is likely to require maintenance. Within logistics, embedded intelligence extends beyond the factory floor and into the supply chain and logistics domains, where AI and advanced analytics are being utilised to optimise supply chains in real time. Meanwhile, in the retail environment, DX is altering how services are provided to customers and how customers do their shopping.

All the above combine to mean that more budgetary resources are expected to be earmarked for digital innovation initiatives across the private sector in the years ahead. Further, the IDC Middle East CIO Survey 2019 revealed that 43% of organisations in the region will allocate resources to digital innovation, compared with 39% last year, implying that numerous organisations in the region are under increasing pressure to improve operational efficiency and enhance customer engagement.

This financial and end-user pressure leads back to the same conclusion – tight-knit collaboration between CFOs and CIOs. By combining the forces that both executive positions command, namely budget management, operational efficacy and technological development and deployment, companies will begin to see greater impact delivered to their bottom lines, and ultimately for the private sector organisations, happier customers.

The major challenges CFOs face before we arrive at such a utopian vision of organisational efficacy include staying on top of regulations (as 27% of respondents to the IDC's Middle East Line of Business Survey 2019 indicated), dealing with inefficient and error-prone planning, budgeting, and forecasting processes (24% said), and communicating with the broader organisation (22%).

It should go without saying that these challenges have become increasingly more technical as the effects of the 4IR have made themselves known to organisations in the region. And it is therefore logical and sequential that the involvement and optimisation of the CIO's skills should be brought to bear on the crucial work CFOs have to carry out today.