CFO need to know

Who is managing digital disruption?

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As Australian consumers embrace digital, many Australian organisations, executives and boards are failing to keep up.  We are seeing a step-change in the way people are using digital devices and services to engage with organisations.

Consumer feedback about digital experience continues to reveal many Australian organisations failing to get the basics right — organisations that have yet to acquire contemporary digital capabilities or articulate their strategy for a rapidly evolving digital market.

These basics are barriers to customer engagement and open the door to disruptions from new competitors.

Digital is the defining megatrend of our time

Digital creates both opportunities and threats, and has the proven potential to directly impact companies from top to bottom. This is especially true for the CFO as digital is disrupting financial models, operations and valuations, and the overall capital agenda at an accelerating pace. According to our most recent survey, the DNA of the CFO revealed that many CFOs admit that their understanding of digital is lacking. Among the finance leaders surveyed, 58% said that they need to build their understanding of digital, smart technologies and sophisticated data analytics in order to deliver against their critical strategic priorities.

Despite this, our survey Partnering for performance Part 5: the CFO and the CEO revealed that only 50% of the 652 CFO participants consider the shift to digital to be of high or very high priority for their organisations in the next three years. The same study showed that only 49% believe that they have a major contribution to make as organisations make the shift to digital.

EY - CFOs shift to digital

If CFOs want to fulfil their agenda of growing, protecting and transforming their organisations, they need to address the organisation’s digital readiness and the gaps that exist. And they need to do it with a sense of urgency.

Accordingly, by neglecting to react to a digital business model, CFOs risk allowing inefficiencies to continue that digital could help address. Because of these inefficiencies – and the relenting advances digital continues to make – CFOs risk losing profit potential because they have no insight into the organisation’s overall digital budget. They also risk falling behind their competitors, and exposing their organisations to regulatory and contractual compliance issues. Additionally, they risk missing the significant changes occurring across the international tax landscape, which has a direct impact on a company’s bottom line.

Digital is fundamentally changing how companies do business

By understanding their organisation’s digital maturity, identifying the digital priorities and creating a holistic and strategic approach to their current financial framework, CFOs can get the best return on their digital investment. Of equal importance, CFOs can leverage digital to build trust within the organisation, and among clients, regulators and shareholders.

Developing a business strategy built for a digital world means looking holistically at all aspects of the business, the internal organisations, the customer experience and the business model that drives it. Making digital a priority means understanding how it is changing business models — and how fast change is happening.

Consumer behaviour is changing and how companies deliver media to audiences is being transformed. The march of digital is also driving changes in advertising and consumer revenue streams. These alterations are happening today, are irreversible and show no signs of relenting in the near future.

A business strategy built for a digital world means fundamentally shifting the culture within the organisation to one of innovation, agility and speed. Successful M&E CFOs recognise that digital change is too disruptive for incremental approaches, and that what helped to build them to this point will not continue to drive the organisation forward. Done correctly, CFOs can unlock real value and understand more about their customers, their organisations and how to drive growth.

Concerns over digital privacy

Australian consumers continue to worry about the personal information organisations can access.  Our recent Digital Australia: State of the Nation 2015-16 survey highlighted that the percentage of Australians concerned about what information companies can access about a person’s digital behaviour has grown from 61% to 64% in the last year.

EY - Digital concerns

Consumers are willing to disclose personal information, if they can see how it’s being used. With the rise of social media, people are putting unprecedented levels of personal information into the public domain but social media networks like Facebook have comprehensive, self-administered privacy controls. Organisations need to confirm they are compliant with the Office of the Australian Information Commissioner’s (OAIC) Australian Privacy Principles and allay consumer fears by providing transparency, choice and control, including granular control over how personal information can be used.

What more can CFOs do?

  • Seek to collaborate with new entrants to disrupt the ecosystem
  • Accelerate, innovate and facilitate patient-led transformation
  • Make sure you have the right people involved from IT to marketing and are aligned on their actions
  • Partner with the CEO to confirm to the organisations approve to risk is adequate

For more information read our Digital Australia: State of the Nation 2015-16 findings and the new study: The DNA of the CFO.