Digital Readiness – Disruption, Transformation and Extinction
29 April 2020 | Minutes to read: 3

Digital Readiness – Disruption, Transformation and Extinction

By Janelle Manders

The start of a new decade is always a good time to consider how to prepare your company for the decade ahead.  The growth in digital data, the plethora of digital platforms and the influx of new technologies are a clear sign that this decade will be even more tumultuous than the last.  The digital realm encroaches more and more on how businesses and individual interact.  Digital readiness is essential for navigating the next decade to ensure companies not only survive but thrive.  Understanding the level of digital readiness will also allow us to identify how the CFO’s role may be impacted.

For the purposes of this article, we’ve identified three types of digital readiness – Disruptors, Transformers, and Extinct.

Disruptors are companies who have embraced the digital realm, who may have had some success and are continually exploring more opportunities through a commitment to innovation and research.  For these companies, ‘Cash is King’.  The CFO’s focus may be on overseeing robust budgeting process as well as monitoring and feedback protocols will be essential in ensuring sufficient resources to keep operating.  As the digital data becomes more valuable it will be necessary not only to ensure that data is analysed, protected and used in line with legislative and ethical requirements but also to keep abreast of accounting standards to measure the data in the future.  Depending on the type of research being done, protocols around documentation on the research will be essential to allow for government grants and R&D tax concessions to be applied for.

Transformers are companies who are starting to embrace the efficiencies that new technology brings to business processes and the customer experience.  Digital change will require a review of business models, processes to determine what needs to change to keep existing clients, attract new ones and improve operating efficiencies.  It may also require changes in culture by using new products that don’t deliver in the short term or listening to clients in a different way.  The CFO’s role will be working to align new processes between the Finance Department and other parts of the organization.  It will require focus on how these changes are going to be funded and also liaising with HR if there are redundancies due to the improved efficiencies.  Most importantly will be providing accurate financial information during a period of change to ensure that the CEO and the Board are well informed about the financial impact of the changes.

Extinct are companies that want to maintain the status quo and do not wish to embrace the digital realm or are unable to change.  While this seems overly harsh, it stresses the urgency in determining whether there are efficiency gains or new customers that could be generated.  The CFO’s role in these companies will initially be to challenge the status quo, to force discussions about the future of the business.  If change is unlikely or impossible may focus on a financial exit strategy as it seems unlikely in the future with an aging society, there will be any business who can attract customers and be as efficient as its competitors who are using modern technology.  It may not happen overnight but helping the CEO and Board be prepared and options for the demise of the company will be essential.

It’s easy to ‘look into our crystal ball’ and hazard a guess as to the issues arising from the digital economy that will confront the CFO.  Yet it is only a guess, the best way for CFO’s to handle the demands of the decade will be to go back to basics – monitor cashflows, prepare on time financial reports, keep realistic budgets, provide relevant and ongoing feedback, be aware of the legislative changes surrounding your company and always ensure that the company’s strategy is aligned to its financial position and always be prepared to ask the hard questions.

Digital Readiness – Disruption, Transformation and Extinction

Janelle Manders

Janelle is a Director in our Business Advisory division. She specialises in providing advice specifically tailored for businesses in the digital realm including e-Commerce, technology, startups and global business. With the digital economy growing exponentially, it's exciting to combine good practical strategy advice within the exciting technology driven digital domain.

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