Agility, Resilience, Execution: How CFOs Are Building Better Businesses Through Digital Transformation
Last July, I sat down with John Connors, former CFO at Microsoft and a Partner at Ignition Partners, to discuss how the pandemic has changed the nature of the finance office.
We talked about how the pandemic exposed a new normal where commercial circumstances are changing daily, and the CFO’s office is shifting to a much more real-time and proactive focus.
“If you think about the way we as CFOs have operated, you have a monthly close, a quarterly close and an annual planning process,” John noted. “That’s been totally upended. CFOs have to be totally agile now and be able to react immediately to changes in the business and ultimately be able to predict what’s going to happen and steer their businesses in the right direction.”
Like many of the changes that came with 2020, the imperative for the CFO to have insights into the day-to-day operations of the business—and play a strategic role in guiding those operations—will not go away once the virus is finally defeated.
In fact, with many anticipating a post-pandemic boom, the CFO’s role is arguably growing even more expansive as companies lean on their expertise to help maximize their rebound from last year’s disruption.
Deloitte reports in its latest CFO Insights newsletter: “Over the past year, many CFOs have had to deal with higher demands and expanded responsibilities thanks to the COVID-19 pandemic. Across industries, those expanded duties have included leading transformation efforts—both within finance and the overall organization—as well as driving enterprise growth as companies seek to capitalize on post-pandemic opportunities.”
Speaking from both my own experience and in talking with other CFOs, these new demands are requiring us to think differently about the capabilities of our teams so that we can meet these new challenges while, at the same time, “keeping the lights on” in the traditional finance functions.
Deloitte’s newsletter highlights the need to improve finance operations with a focus on delivering timelier information, better insights, and automation to streamline operations. The modern finance leader plays a critical role in sponsoring and driving digital transformation efforts in both the finance function and more broadly across the business. These high-impact automation projects will help us, as CFOs, increase the agility and resilience of our businesses and increase our probability of success in this rapidly changing and uncertain environment.
Contracts ultimately define what a company buys, what it sells, and how it runs, and should be a focus of every CFO’s transformation plan. At Icertis, we are seeing contract intelligence software have a transformative impact on how our customers run their businesses. CFOs specifically are leveraging this cutting-edge software to drive agility, resilience, and outcomes for their business as they take on a larger role in driving business excellence at their companies.
The ability for enterprise leaders to respond quickly to changes in the operating environment is a function of visibility and control. Today, finance leaders have access to a depth and breadth of data that was unimaginable just a few years ago and our ability to use that information to drive tangible outcomes is still evolving. The pandemic has shown many of us that the gap between great business insight and the ability to act on that insight is still wider than it should be – many companies were unable to course-correct quickly because they lacked visibility and control in the midst of the crisis.
For this reason, contract lifecycle management (CLM) systems that structure and connect contract data from across the enterprise are quickly becoming must-have systems of intelligence for CFOs. An organization-wide CLM system can give finance and business teams instant access to the company’s full range of entitlements and commitments. That visibility gives CFOs great confidence in managing their business risk and the bottom line.
One Icertis customer put it well last year when discussing how his company leveraged this technology during the worst of the crisis: “Knowing that we have all our customer-facing contracts in one place and then being able to dynamically search those contracts for keywords and phrases has helped us to understand the scale of the issue, make informed decisions and ultimately help us to focus our mitigation efforts much more effectively,” he said.
Real-time, comprehensive access to your full portfolio of contract information from a CLM system helps finance be more agile in the face of rapidly changing market conditions.
Risk is present in every one of our businesses – that’s a fact. Since we can’t predict the future, our goal as CFOs is to make our companies more competitive by creating systems and processes that allow our business to be more risk-tolerant and resilient.
“The pandemic highlighted the importance of resiliency and determining the ability of the enterprise to respond to, and navigate, a risk event,” Deloitte notes. “For example, if the supply chain for a critical semiconductor part in a company’s automobile production is disrupted, how quickly can it adapt to—and overcome—the constraint?”
Operationally minded finance teams will partner with procurement and supply chain teams to drive a more proactive and nimble approach to plan for and manage risks to the business. Cross-functional teams can collectively leverage an organization-wide CLM platform to make the business more resilient and risk-tolerant.
For example, by extracting and monitoring key contract data like delivery dates and payment terms, CLM can act as an early warning system when suppliers or customers are struggling to deliver on their obligations. And in cases where companies need to onboard new suppliers (as with the semiconductor example above), CLM can greatly accelerate the source-to-contract cycle, where our customers have seen as much as a 92% reduction in contract turnaround time.
Execution and Outcomes
As business leaders, we place a premium on people and systems that improve the probability of success. Deloitte notes that CFOs are increasingly leading the way inside their companies, with “49% of [CFOs] serving as co-leaders for business transformation.”
It is indeed the golden age of technology for the office of the CFO – there are myriad solutions that automate transaction processing, streamline the close process, and give us levels of insight that would traditionally take armies of financial analysts to deliver.
Add to that list, modern contract management solutions that act as systems of intelligence that give the CFO the visibility and control they need to manage their business. And through automation and integration into surrounding systems, these sophisticated solutions can ensure the intent of contracts are fully realized, which ultimately improves cash flow and reduces risk.
According to World Commerce & Contracting, an estimated 9% of revenue is lost due to poor contract management. An intelligence contract management system can prevent this kind of leakage by automating contract renewals or by connecting to the revenue delivery system to ensure that all terms and conditions are met to maximize the earning process. Similarly, we are seeing customers leverage their contract systems to monitor supplier performance or to balance supply chain risk with customer obligations.
These are just a few examples of how businesses are able to use contract management solutions to ensure the full intent of every contract is fully realized.
The CFO takes a long-term strategic view and works across functions to drive overall business improvement — they are in a unique position to lead digital transformation efforts that work across functional silos and systems to drive growth, improve the bottom line and reduce risk. As CFOs take on this increased responsibility to drive transformation across their business, they should consider investing in high-value systems of intelligence, like CLM, that provide the visibility and control they need to drive agility, resilience, and outcomes across the business.
Icertis Remains a Leader in the Q1 2021 Forrester Wave
Icertis has again been recognized as a Leader in the Forrester Wave: Contract Lifecycle Management For All Contracts Q1 2021 report. This is the second consecutive Wave report to recognize Icertis as a Leader. Read the report and learn more about the impact of CLM and why Icertis has been named a Leader.