Digital transformation is not only changing the way in which companies do business in Europe, but also the auspices of traditional corporate roles - and none more so than the Chief Financial Officer (CFO).
The CFO’s role, and the tools they use to undertake it, are both being disrupted; and that transformation is being defined by technology now and into the future.
In the future, a CFO and his finance team will be defined by how well they harness technology, innovative business tools and the digital capabilities available to them. Currently, one of the most popular ways for a CFO to monitor business performance is via dashboards.
Effective dashboards are beholden to meaningful KPIs. These will vary from sector to sector, but always comprise more classical measures such as days payable outstanding, number of invoices per month and cost drivers. But what are the KPIs that CFOs should be tracking, alongside traditional financial benchmarks, as we move in to a new financial year?
• Customer data – This information can unlock a wealth of knowledge about your customers, which can be linked into traditional financial metrics to uncover a deep set of data which enables a CFO to do their job. KPI data here should comprise information on the customer lifecycle, customer churn, customer interaction information, buying patterns and satisfaction levels.
• Forecasting – CFOs in manufacturing companies can already forecast results and deliver revenue predictions based on customer profiles and existing demand. This should be the approach taken by the majority of businesses – as opposed to relying on comparisons of the previous years’ performance – which is the normal benchmark.
• Resourcing – Imagine how valuable it would be for a CFO to be able to pinpoint financial resources that are left over from certain projects or business areas. Being aware of this data means it can be redeployed effectively within the business reducing waste, budget churn and reproduction of resource.
• Customer communications – Data around the impact of a business’ social media activity and corporate PR activity on customers, the wider market and general awareness. This can be compared to financial performance to see if this activity is impacting the business’ bottom line.
To measure and monitor – and exploit – these new value drivers, CFOs need new, digital KPIs that modern cloud-based tools and technologies can capture. These could include data quality, customer relationship, quality of people and business processes, and reputation of brand. But choosing the right KPIs is hard. Making sure that KPIs are measurable, impact the business, and rely on accurate, actionable data is integral. The worst thing a CFO can do is not have any KPIs.
To begin with KPIs may be very simple, and may need to change or evolve over time, but at least they’ll be in place, giving the whole team something to focus on, to track the business and progress. KPIS should be a work in progress and reflect the changing priorities of a business.
The glue that binds all of this together is that the dashboard platform is based on cutting-edge and integrated software that can flexibly deliver a real time view of KPI performance and a move towards predictive analytics – not dated historical reporting – to enable a CFO to run a water-tight finance operation.
Having this range of KPIs, managed through an innovative dashboard, can enable a CFO to manage the company’s bottom line and deliver strategic corporate growth advice. Such as is expected from a contemporary CFO.