The CFO’s Strategic Framework for Digitizing Finance

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As far back as 2018, McKinsey & Company implored CFOs to get in front of digital finance or risk getting left behind. The firm’s research revealed a clear mandate for CFOs to lead this digitization effort, even though many admitted that they didn’t know where to start.

Gartner’s research in early 2021 reinforced both McKinsey’s findings, with 93% of finance leaders agreeing that digitization is imperative and 39% admitting that previous transformation efforts hadn’t matched expectations. Gartner emphasizes that “many organizations continue to run unwieldy finance processes using outdated technology.”

This continues to be true today, as told by a recent CFO Dive survey of 160 CFOs. In the survey, 78% CFOs said that their manual financial operations could be improved. Additionally, almost 95% said that reducing manual, time-consuming, and error-prone processes is a priority for their organizations' CFO and the finance function. All of this suggests that many finance leaders could benefit from the advice of a CFO who has successfully digitized the finance function.

That’s just what Jeff Epstein, the former CFO of Oracle and current operating partner at Bessemer Venture Partners, shared on a past Tesorio webinar as he revealed his strategic framework for digitizing finance.

1. Simplify

According to Epstein, the first step they took for any function they wanted to fix or update at Oracle was to ask the following question: Is the process that is being used today as simple as possible, or has it become overly complex? Then, they would go about simplifying the approach to the greatest degree possible.

2. Standardize

Next, they would figure out where that particular process was being used throughout the enterprise so that they could standardize it across all geographic regions, company subsidiaries, and individual divisions or departments. The goal was not just to find the best way to handle the process but to implement that “one best way” throughout the entire enterprise, says Epstein.

3. Centralize

Once they standardized a process across the organization, they would then move to centralize it into one organizational team or in one geographic area for efficiency’s sake. For instance, Epstein’s finance department decided to centralize the credit and collections functions for all of Oracle’s customers in one country where they knew they could affordably locate the process, adequately hire and retain the needed talent, and create further efficiencies by having the same group handle that entire AR function.

4. Automate

After simplifying, standardizing, and centralizing the process, Epstein would work to automate it by implementing a digital finance solution like Tesorio. After all, he explains, “You don’t want to try to automate a complex, non-standard, decentralized process.” That would make the automation phase unnecessarily complicated and expensive, dooming it to partial or total failure and potentially setting your digital finance transformation back by months or years.

Are You Ready to Digitize Your Finance Function?

From McKinsey and Gartner to highly regarded CFOs like Epstein, the consensus is that sitting on the sidelines and clinging to manual finance processes is just not a viable option for any CFO who wants and needs to develop a modern finance organization.

Tesorio is here to help you get started on the road to digital finance. Contact us today to discuss automating your cash flow forecasting and AR and collections functions. To learn more about the digitization of finance and the concept of Connected Finance, listen to Tesorio’s recent webinar, The Connected CFO: The Future of Finance.