Krigsman: Digital transformation and the innovative CFO

ATN-300InsightaaS: Regular readers of Across the Net are aware of our respect for Michael Krigsman, well-known IT expert and author of the widely-read Beyond IT Failure blog on ZDNet. We appreciate Krigsman’s tendency to base his posts on extensive research, and to present a distinct (and informed) point of view on subjects that we consider important. In this piece, Krigsman connects several disparate sources - a briefing by GE's CDO, a Wall Street Journal post, research from OpenMatters and Deloitte & Touche - to explore the role that CFOs should play in digital transformation. At the core of Krigsman's argument is the straightforward point that "business model change often means a shift in how a company invests resources and generates returns. By this logic, the CFO should be a natural partner in digital transformation efforts." He goes on to quote penMatters CEO Bary Libert as saying that "digitally and big-data savvy CFOs" reduce risk by "spending their organization’s resources on building and mining intangible assets powered by today’s technologies" - and that the best of these companies, dubbed "network orchestrators," "generate value premiums far in excess of companies in other groups," with P/E ratios that are three to four times higher than more conservative peers. This can represent a daunting mind-shift for CFOs, just as the transition from IT operator to driver of corporate innovation is a challenge for many of today's CIOs. In the end, though, Krigsman believes that the bottom line is,"when networks of people become a significant driver of value, accumulation [of assets, a traditional CFO objective] gives way to co-creation and shared experience." This is, as he points out, "a new kind of thinking for many CFOs" - but his post makes the point that the transition is important to future business success.

Discussions about digital business transformation usually center on marketing and the CMO. The popular notion is that digital transformation is primarily a set of online marketing activities such as e-commerce, building communities, and interacting with customers on social media.

However, more sophisticated observers recognize that digital transformation has significant implications for operations and business models. For example, during a CxOTalk conversation with Ganesh Bell, the Chief Digital Officer for General Electric Power & Water, he discussed the role of sensors, data, and analytics in improving GE’s industrial products and services. In GE’s case, the digital transformation involves marketing, product development, and other parts of the company.

The CFO connection. Although most people associate digital transformation with new business models, we do not hear much about the Chief Financial Officer role in discussions on digital transformation, innovation, and disruption. The lack of CFO prominence in this discussion is probably due to several factors.

The general perception of CFO as bean counter, rather than digital ninja, does not help the case for inclusion. In addition, the CFO often plays a background role when it comes to marketing, social media, communication about innovation...

Read the entire post on the Enterprise Irregulars blog site: Link

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