Chief Financial Officers (CFO) play a vital role in successful digital transformation, enabling small and medium enterprises (SMEs) to employ new technologies, finds new research from Vlerick Business School.
Digitalisation has changed the business environment dramatically in recent years. Today, every organisation must embrace the potential of new technologies, but which executive member should play a leading role in digital transformation?
Together with his colleagues, Kristof Stouthuysen, Professor in Management Accounting and Digital Finance and Director of the Centre for Financial Leadership and Digital Transformation at Vlerick Business School, investigated the role of CFOs in digital transformation. While CFOs are typically involved in financial reporting and investment decisions, little is known about their involvement in promoting and driving digitalisation. Surveys were distributed to 121 CFOs and finance leaders to assess their level of involvement.
Of the CFOs surveyed, 92% were actively engaged in the digitalisation of their finance office, making decisions on new technological applications and the use of analytics to improve functioning, while 68% indicated that they play a leading role in the wider organisation’s digital transformation. This confirms that CFOs play a proactive role in the digital transformation of SMEs.
But does this involvement actually lead to more successful digital transformation? The researchers compared digital maturity scores of companies with an involved CFO with companies in which a CFO is not involved. Findings show that organisations with an involved CFO perform 8% better in terms of digital maturity compared to those with a CFO who’s not involved.
Professor Stouthuysen says,
“Being a digitally mature company goes beyond the implementation of new technologies. In addition to the technology component, several other dimensions should be considered; having a good digital strategy, encouraging cross-functional collaboration, creating a data-driven culture, and making sure the data is reliable.
“It appears CFOs act as evangelists, helping people understand the digital economy, as well as acting as architects, fitting together the pieces so that performance can be measured. The CFO can truly accelerate and improve the firm’s digital transformation process.”
The researchers further compared what made digitally successful CFOs different from their less successful peers, discerning that a digitally successful CFO needs to have strong leadership skills with an innovative mindset and in-depth understanding of the latest technologies. Altogether, this shows that CFOs need to step forward and take up a pioneering role in their firm’s digitalisation process as they can guide their company to success.
These findings were published in the white paper ‘Do CFOs play a leading role in digitally transforming their SMEs?’