The Tech-Minded CFO
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The document discusses topics that a tech-minded Chief Financial Officer of Los Angeles County Department of Public Works focuses on, including innovation, social media, mobility, cloud, and information. It provides guidance on funding innovation projects, optimizing innovation through university partnerships, understanding the value of social media and ensuring its use is business-driven. It also addresses embracing mobility and cloud technologies to deliver value when demands require it. The CFO aims to create an intelligent enterprise by focusing on outcomes, using data to create value, and governing data use.
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The Tech-Minded CFO
- 1. The Tech-Minded CFO Isaac Gindi Chief Financial Officer County of Los Angeles Department of Public Works igindi@dpw.lacounty.gov
- 2. TOPICS OF DISCUSSION: • Innovation • Social media • Mobility • Cloud • Information (Big Data, Business Intelligence, …)
- 3. Innovation • Balanced funding • Accept risk and uncertainty of results • Use new metrics to measure success • Select projects with short timeframes • Provide Leadership to Industrialize Innovation
- 4. Optimizing innovation • Building Partnerships With Nearby Universities/Colleges • Create Incubation Centers
- 5. Social Media • Understand the value • Mostly driven by external customer demands. • Must be driven by business, not IT. • Resist focusing on risk alone
- 6. Mobility • Sponsor uses that deliver value • Driven by external and internal customer demands. • Must be driven by business, not IT. • Resist focusing on risk alone
- 7. Cloud • Cloud use doubled from 2013 for many finance-focused applications. • Driven by internal demands and mobility needs. • Must be driven by business, not IT. • Resist focusing on risk alone
- 9. Value Driven CFO • Creating the “Intelligent Enterprise” • Focus on business outcomes and measurable data. • Turn data into value for the company • Take charge of data governance
- 10. How is IT Viewed by CFOs?
Editor's Notes
- The last four are what Gartner refers to as “Nexus of Forces”
- Most organizations don't have a specific budget set aside for innovation. Such programs are usually funded using slush funds or savings made in other parts of IT. How CFOs prioritize technology investments can hugely impact innovation, positively or negatively. Due to the experimental nature of Innovative projects, they often involve open-ended risk, with little certainty around time and cost. Organizations that limit the number of such projects to save costs will eventually be surpassed by competitors from within and outside the industry that industrialize innovation. CFOS NEED TO SUPPLEMENT METRICS, SUCH AS ROI, WITH SOFTER METRICS TO EVALUATE DIGITAL INITIATIVES. Growth rate in number of users. Impact on digital reputation/brand value. Number of clicks per device/returning visitors per site/average time spent on site/cost per click. Increase in data collected/improvement in outcomes. Time Frame Is a Critical Factor When Evaluating Digital Projects A fail fast or succeed fast approach should be adopted for new initiatives. For projects involving social media, the first three to six months will be crucial in understanding if the project will be a success long term. CFOs should work with CIOs and other business leaders to determine success criteria, and evaluate them every week to understand if the selected criteria have been met. There is usually no need to prolong a project that shows no signs of activity in that time frame. Kill it fast if it's not working because it is crowding out investment in other initiatives that might prove worthy of attention. A typical time frame for a digital project is likely to be much shorter in length than a normal project. Provide Leadership Symbols of Industrializing Innovation Innovation can often take a strain on resources, financial and nonfinancial before success can be delivered. Innovation cannot be seen as a quick fix, and an organization cannot become innovative for a short period only. Innovation needs to form part of the culture of the organization for lasting success to take place. To become part of the culture, innovation needs to be scaled to a level where a pipeline of ideas is constantly being created to be evaluated. Examples: Born digital: Amazon, Adapted: UPS, Dyson
- these organizations optimize the way in which innovation is managed by four methods. Building Partnerships With Nearby Universities/Colleges Universities are a great way of testing talent and ideas for a low-cost investment. Fresh minds who are not jaded by past failures or operational requirements, and are open to trying totally off-the-wall ideas, brings about new thinking from an outside perspective. Students are also incentivized by the chance to prove themselves and secure future employment in the company, thus reducing recruitment costs. Create Incubation Centers Partnerships with small startup organizations and provide access to corporate resources, in return for a small seed investment in the business. (Google’s model).
- The business uses of social media entail much more than employees using Facebook, Twitter, LinkedIn and others. The breadth of ways that social media can improve business performance is constantly expanding to sales; marketing; customer support; public relations and other areas. Unfortunately, in most traditional organizations, social media initiatives are not value driven, rather are mostly driven by external customer demands. When that is the case, the business ends up assigning it as an IT initiative Executive must understand the upside potential and resist the tendency to focus only on the risks of lost productivity or inappropriate communication of enterprise information.
- Mobile technology is changing how people socialize and work. It's not possible to stop mobile devices from appearing in the workplace. Instead, CFOs should sponsor uses that deliver advantage, and restrain those that just increase risk, or cost, for little reward. The number of mobile applications is increasing, particularly in large organizations. This is also driven by customer demand, but also by workforce need for mobility. This will continue to be the fastest growing demand. The use of mobile devices is fairly new to finance business processes and financial applications. During the next three to five years, financial applications will deliver the benefits of mobile. Today, the primary target for mobile will be executives (board books, narrative reporting and management reporting) who need to interact with finance data and reduce their reliance on armies of management accountants with spreadsheets. Although much mobile capability is now focused on the executive and on providing mobile devices with a concise set of metrics for visibility into company performance, companies need to build a vision on how a financial applications mobile strategy will be rolled out during a multiyear period. During the next five years, we will see more financial management functionality being exposed to mobile devices; however, we will not see complete suites available on these devices. Vendors must monitor mobile developments that can augment financial management and incorporate mobility to be competitive, because this will be an area of differentiation during the next three to five years. To properly support mobility, end-user organizations must also monitor their vendors' mobility road maps for to plan on how to leverage these new capabilities. In 2013, about 26% of organizations indicated the use of mobile applications within their enterprises as one of their top-three technology initiatives. Mobile forecasts has increased significantly in 2014. TEM, self-service HR and finance, and management reporting lead the forecast mobile capabilities. Mobile will also be used for workflow and approvals, as is the case with accounts payable invoice automation. Figure 18 shows the current and planned uses of mobile capabilities.
- Cloud and mobility go hand in hand. To some extent, mobility is driving faster cloud adoption. Leverage cloud and mobile for quick wins that address persistent business problems. Cloud use and projections doubled from 2013 for many finance-focused applications. 80% of organizations forecast a move to the cloud for more than 50% of their future transactions. CFOs should take an interest in cloud and mobile technologies. SaaS (and cloud-based delivery) is starting to affect business applications. Many CFOs use mobile devices and would be interested in gaining access to key business information using these tools. Organizations should use this interest to show how wider investments in cloud and mobile technology could deliver benefits across the organization. Analyze the cost structure to implement a cloud approach to ERP and financial management solutions and evaluate applications to ensure that the solution can address the complexities of your business processes. Determine the total cost of ownership (TCO) of the cloud, which may not be less costly than on-premises overtime. There are many reasons that companies are reluctant to move to the cloud. security-related concerns is among the main issues. Another major concern is the current investment in ERP and legacy solutions that are not cloud-based, and it would be costly to convert to these solutions. Recommendations: Understand the variants of cloud ERP, because there is a wide range of cloud-delivered options available. Plan to meet the integration challenges of a hybrid cloud/on-premises ERP environment as users increasingly adopt cloud solutions for noncore processes, if you intend to keep core ERP systems on-premises. Consider cloud ERP in financial services organizations as a potential replacement for aging core ERP systems that are out of support or running on an old technology platform, such as mainframes.
- Creating the “Intelligent Enterprise” – Utilize data to provide insights in improving company performance and managing risk. Provide practical examples or case studies of how “intelligence enterprise” concepts have been used to a address business situation. Apply historical, current, and predictive analytics to give organizations a 360-degree view of data, allowing them to focus on business outcomes and measurable data. Turn data into value for the company – Become a partner with the business units to improve strategy, operations, IT, supply chain, sales and marketing, while deploying capital more intelligently. Taking charge of data governance and business analytics – CFOs are the best suited to identify opportunities for value and apply stronger discipline throughout the organization.