Caution impedes the implementation of new technologies
A new study reveals a paradox. CFOs have a pronounced focus on digital solutions, but key technologies are mostly left untouched. Conservatism and caution characterise finance functions, says Ulf Hilton, Partner in Deloitte CFO Services.
The newest Deloitte CFO Survey reveals that 61 percent of Danish CFOs have not yet started using or are unsure how to use cloud solutions. The same pattern shows with other technologies such as visualisation, advanced analytics, in-memory computing and blockchain. Technologies that many proclaim will transform the finance function.
According to Ulf Hilton, the findings may be due to a certain nature, which characterises the people of the finance function.
“They tend to be risk-averse and somewhat conservative by nature, which do not make them embark on new technologies and systems right away. They need a good business case as well as certainty that the technologies are reliable before they jump on board,” he says.
However, that mentality is somewhat contradicting the mindset needed in the digital era. As many technologies today are developing extremely fast compared to the last 50 years, CFOs need a new approach and mindset to understand and pursue the digital opportunities as they present themselves.
“Formerly, you could follow a technology for a number of years before you needed to execute upon it. This is not the case anymore,” Ulf Hilton says.
Even a mature technology as cloud solutions with several years to its name has a surprisingly poor traction. But, Ulf Hilton says, safety issues could play a part.
“In large public tenders of IT systems, we have experienced that it was downright disqualifying if the solution was based on cloud for security reasons,” he says, adding:
“But as cloud has become standard in American tenders, I believe it will gain a better foothold in Danish and European markets as well.”
Growing demand for hybrid talents
Based on answers from 140 Danish CFOs, the CFO Survey shows that 71 percent of Danish CFOs find it very likely that they will prioritise digitalisation in the next 12 months. According to Ulf Hilton this will increase the demand for the hybrid employee – the talent who can do both finance and IT.
“The hybrid profile is extremely coveted. In the finance function, there is a need for employees who to a greater extent understand the digital applications in depth and who can very actively participate in the implementation of different technologies to create real business value for both the finance function and the business in general,” he says.
As the Danish CFOs will increasingly need tech-savvy employees who know how to exploit the newfound opportunities, the war for talents in Denmark will flare up.
“Business in Denmark is generally good because of a great demand, but we are starting to see a shortage of people with expertise within these technologies. And those with expertise expect to work in organisations that are already high-tech and up to date with the latest digital solutions,” Ulf Hilton says, pointing out that it may therefore be difficult for businesses lagging a little behind in digital terms to get started with new digital solutions even though they strategically plan to.
Finding the sweet spot
For businesses trying to avoid getting squeezed as a consequence of the war for talents, it is an essential discipline to find the right time to start implementing the desired digital solutions and platforms.
“It is about finding that sweet spot where you are neither the first mover nor at the back of the race,” Ulf Hilton says.
One advantageous way to find that sweet spot is by adopting the start-up mentality of starting small, failing quickly and scaling fast. By letting employees experiment with new technologies and create pilot projects where new digital solutions are set to solve various minor tasks, businesses can get valuable insight.
“The businesses then begin to understand what is possible with cutting-edge technologies and where the real business value is,” he says and continues:
“Additionally, by adopting this mentality, they will also gain an advantage in attracting the right talents.”
When the business then locates a profitable project, it can scale it up and obtain the value created. By letting employees experiment and implementing different technologies and digital solutions in small scale continuously, businesses will always find themselves primed for the rapid development in the digital era.
“In that way, you are always prepared for the technological development. You build the right skills in-house and reduce the risk of becoming squeezed by competition,” Ulf Hilton says.
From the CFO Survey 2017