December 19, 2022
3
MIN READ

Digital Transformation Frameworks for CFOs

Finance

We share best in class digital transformation frameworks and the benefits of using one. Make sure you include these 4 things in yours!

Digital transformation is one of the most urgent priorities inside scaling businesses. According to Gartner, over 70% of organizations will digitally transform to improve efficiency and flexibility by 2025, with spending on digital transformation initiatives expected to hit $3.4 trillion by 2026.

It's both expensive, and critical for business growth – and that's why Chief Finance Officers (CFOs) should be taking a leading role in defining the digital transformation strategy inside their business.

The remit of the CFO has evolved and expanded over the last decade. Once perceived as a back-office, largely administrative position, CFOs have grown to become critical change agents, with direct responsibility for scaling their business. Research shows that “Finance leaders are deeply involved in determining how businesses adapt to significant changes in how work gets done—particularly in places where digital and finance intersect.” That means that not only does the budget for digital transformation initiatives have to be signed off by CFOs, they're often also the ones at the helm of implementation and execution. To do that well, and drive sought-after efficiency gains, they need a robust digital transformation framework.

What is digital transformation?

'Digital transformation' refers to the application of new technology to formerly manual business tasks and processes. The goal is to find efficiency gains and drive fundamental improvements across the business, ultimately resulting in a better customer experience and competitive differentiation in the market.

It's a broad school. Digital transformation can be used to describe any kind of digitization across any aspect of the business. Usually, modernizing IT systems and infrastructure is a critical part of a digital transformation strategy. A lot of businesses will look to cloud software (SaaS) to help automate manual processes, improve cross-team collaboration, or add new functionality to their products and services. But it can refer to higher-level initiatives, too, like introducing new digital-first business models.

Why do organizations need to digitally transform?

Digital transformation has been something of a buzzword for several years now, but became a pressing concern for most CFOs during the pandemic. In a suddenly remote world, they needed to digitally transform in order to continue to serve customers, and to enable employees to do their work from home. Over the last few years, adoption of new technologies accelerated significantly as business leaders looked for ways to  optimize processes and drive growth, and that trend isn’t set to slow down. In fact, more than 70% of CFOs now consider digital transformation their top priority. 

While digital transformation is clearly important, CFOs still need to ensure they're thinking critically about the approach that's right for their company, and presenting a clear digital transformation business case to other senior leaders. Otherwise, they can end up wasting money on digital solutions and software that do more harm than good, and actually end up impeding – not improving – business growth.

What is a digital transformation framework?

A good digital transformation framework gives CFOs a "blueprint" for planning, managing and driving success from digital transformation projects. The digital transformation process can be a challenging one, requiring not only budget, but also C-suite buy-in and behavioral change across the business. Establishing a strong framework gives CFOs the tools they need to make meaningful change, without damaging culture or interfering with the ability to serve customers day-to-day.

In the case of SaaS, a digital transformation framework also gives CFOs the opportunity to take a more considered approach. Successfully implementing new software is rarely as straightforward as plugging and playing – however much vendors might try to emphasize their free trials, ease of integration and low cost-per-seat. For any new SaaS, the whole lifecycle needs to be taken into account – from discovery to implementation, ongoing management to offboarding – to ensure it adds value and drives results.

What are the benefits of a digital transformation framework?

Digital transformation frameworks help avoid some of the issues CFOs commonly encounter when attempting to implement a new digital transformation strategy. These can be complex and manifold, from lack of commitment among key stakeholders inside the business, to lack of clarity about how to scale projects beyond obvious first steps and low-hanging fruit.

McKinsey points out one of the biggest challenges: "there are many small, product-focused digitization efforts ongoing in an organization, but there is no overarching strategy and no central coordination and moderation". This is particularly true of efforts to implement SaaS. Few businesses have a single, centralized repository of all the SaaS inside their business, let alone a view of what they're costing and how much value they're adding. Different departments will often end up investing in the same, or similar tools, and the cost of duplicate SaaS can be crippling. Many businesses have duplicated and unused software that they don’t need; in fact, only 14% of business leaders believe all their SaaS subscriptions add value. It's no surprise that wasted cloud software was estimated to total $17.6 billion in 2020 – and without a clear framework to guide the process of digitization, that number will only grow.

What are the features of a good digital transformation framework?

There are lots of different ways CFOs can approach building a digital transformation framework. Finding the right fit will depend on business structure, culture, goals and priorities. But the best frameworks all have four elements in common.

Set clear targets

One of the major reasons digital transformation strategies fail is because they're not clearly-enough defined. As we mentioned, digital transformation is a very broad term, and plowing into it without a strong sense of why, or what the desired outcomes should be, is unlikely to yield results. Ensure you're leveraging digital transformation in service of an important and tangible business improvement. Then, identify the metrics that matter so you can easily measure success.

Get buy-in

Another common stumbling block is getting the whole organization to participate in change programs. This means getting approval from, and finding champions in, the senior management, to ensure transformation projects are prioritized. But it also means taking a bottom-up approach to promote behavioral change, and embed new ways of working at the culture level. Good communication at every stage is imperative: it will avoid creating silos and ensure the whole business is able to collaborate and perform.

Build capabilities

Building capability doesn't just mean buying new tech. While software is an important driver of successful digital transformation, it also needs to be supported by processes and systems to ensure it adds value in the short and long term. When it comes to implementing new SaaS, there are several core processes to consider, including requests and budget approval, payment and invoice management, risk assessment and offboarding – to name a few. Make sure that whatever digital capability you add is underpinned by holistic lifecycle management, and robust processes the whole business can follow.

Test and iterate

Digital transformation isn't a 'set it and forget it' project. Whatever initiatives and technology you implement should be frequently reviewed to ensure they're driving towards your established goals, and aren't generating any negative side-effects. This is a particularly important process for SaaS, which can incur a number of nasty hidden costs if not adequately managed. Ensure you check in regularly to ensure that what you've implemented is still being used, still adding value, and still the best-in-class option for your team.

Examples of digital transformation frameworks

For CFOs looking to design their own digital transformation frameworks, there are some tried and tested resources that can help guide thinking and inspire. Some of our favorites are:

How can Cledara support digital transformation?

For savvy CFOs, whether they are scaling quickly or retrenching in leaner times, implementing software management processes and tools is an important – and easy – win. In a fierce competitive landscape and a volatile market, digital transformation is critical to survival. But CFOs need to more than just survive in the short term. They also need to ensure their business, and the software that powers it, is set up to scale into the future.

Software management ensures exactly that sustainable scalability. Centralizing and automating software management gives businesses full visibility over subscriptions while empowering teams to own and manage their applications. It helps CFOs improve visibility, reduce risk and costs, and protect company culture.

At Cledara, we want to help operations leaders get a grip on their startup’s software.  Proactively implementing SaaS management processes means that businesses don’t have to restrict control and prevent creativity, but can thrive by making the most of their software subscriptions.

We help scaling businesses make more of their software subscriptions by unifying and automating their entire SaaS journey – from discovery and purchasing, to management and cancelation.

To find out more about how Cledara helps streamline SaaS management so businesses can scale faster, book a demo today.

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