CFO Insights - Page 2

How Re-skilling The Finance Team Can Drive More Value To The Business?

Published on

9 March 2023

With training and development, businesses can ensure that their finance teams are equipped with the skills and knowledge necessary to add more value to the business.

The world of finance is constantly evolving, with new technologies, tools, and regulations emerging on a regular basis. This rapid pace of change means that finance teams need to be constantly learning and adapting to stay ahead of the curve. One way to achieve this is by reskilling the finance team.

Reskilling refers to the process of teaching employees new skills that are relevant to their current or future job roles. In the context of finance, reskilling could involve training team members in areas such as data analysis, machine learning, and programming languages like Python or R. By investing in reskilling, businesses can ensure that their finance teams are equipped with the knowledge and skills necessary to add more value to the business.

Here are some ways that reskilling the finance team can provide more value to the business:

Better Data Analysis And Reporting

In today’s data-driven business environment, data analysis and reporting are critical to success. Reskilling the finance team to be more proficient in data analysis can help them uncover valuable insights that can inform strategic decision-making. By analyzing financial data, finance teams can identify areas of the business that are underperforming, track key performance indicators (KPIs), and forecast future trends.

In addition to data analysis, reskilling can also help finance teams to produce better reports. By improving their skills in data visualization, for example, finance teams can create reports that are easier to understand and more actionable for other departments within the business.

Improved Risk Management

Finance teams are responsible for managing risk within the business, from identifying potential risks to developing strategies to mitigate them. Reskilling the finance team in risk management techniques can help them to identify and analyze risks more effectively, which can lead to better decision-making and reduced risk exposure for the business.

Reskilling in risk management could involve training in areas such as scenario analysis, stress testing, and risk modeling. With these skills, finance teams can more accurately assess the potential impact of different risks on the business and develop strategies to mitigate them.

Greater Efficiency And Productivity

Reskilling the finance team can also lead to greater efficiency and productivity within the department. For example, training team members in process automation can help to streamline repetitive tasks and free up time for more strategic activities. Similarly, reskilling in project management can help finance teams to manage projects more effectively, improving collaboration and communication across the department.

Increased Innovation

Reskilling can also help to foster a culture of innovation within the finance team. By encouraging team members to learn new skills and explore new areas of finance, businesses can create a more dynamic and forward-thinking team. For example, training team members in emerging technologies such as blockchain or artificial intelligence can help them to develop innovative solutions to complex financial problems.

Improved Cross-Functional Collaboration

Finally, reskilling the finance team can also improve collaboration and communication with other departments within the business. By training team members in skills such as data visualization, finance teams can create reports and presentations that are more accessible to non-financial stakeholders. This can lead to better understanding and alignment across different departments, improving overall business performance.

In conclusion, reskilling the finance team can provide significant benefits for businesses of all sizes. By investing in training and development, businesses can ensure that their finance teams are equipped with the skills and knowledge necessary to add more value to the business. From better data analysis and reporting to improved risk management and productivity, reskilling can help finance teams to become more effective and innovative in their roles. As such, it is an investment that is likely to pay off in the long run.

For finance leaders who want to find out more on how to further drive value from the finance teams in this new era of finance, you can sign up for any of DigitalCFO Asia’s Symposiums happening in your local country. Do note that the Indonesian Symposium 2023 will be happening in a week’s time on the 16th of March 2023. If you have not reserved your spot, click here!

Will APAC Experience A Slowdown In Growth Or A Recession In 2023?

Published on

9 March 2023

The APAC region has shown remarkable resilience and adaptability in the face of significant challenges, such as the COVID-19 pandemic.

The economic growth of Asia has been impressive in recent years. Countries like China, India, and Vietnam have become global economic powerhouses, attracting investments from around the world. However, with the outbreak of the COVID-19 pandemic, there are concerns about the future of Asia’s growth. In this article, we will examine whether Asia will see a slowdown on their growth or experience a recession in 2023.

First, it is essential to understand the factors that drive Asia’s economic growth. The region’s growth is primarily driven by exports, domestic consumption, and investments. The Asia-Pacific region has become a hub for manufacturing, with China leading the way. The country has a large and skilled labor force, which makes it an attractive destination for companies looking to set up their manufacturing plants. Other countries in the region like Vietnam and Indonesia are also becoming manufacturing hubs, attracting foreign investments.

Domestic consumption is also a critical driver of Asia’s economic growth. As the middle class grows in the region, there is an increase in demand for goods and services. Countries like China and India have a massive consumer base, which provides companies with opportunities to tap into the market.

Investments are another key driver of Asia’s economic growth. With low labor costs and a growing consumer base, many companies are looking to invest in the region. China’s Belt and Road Initiative (BRI) is also contributing to the region’s growth. The initiative aims to connect Asia, Europe, and Africa through a network of infrastructure projects, including roads, railways, and ports. The BRI has attracted significant investments, which have helped to boost the economies of participating countries.

However, the COVID-19 pandemic has had a severe impact on the global economy, including Asia. The pandemic has disrupted supply chains, leading to a decrease in exports. Lockdowns and social distancing measures have also reduced domestic consumption. The pandemic has also affected investments, with companies postponing or canceling their investments due to the uncertainty caused by the pandemic.

The pandemic has led to a recession in many countries, including the United States and Europe. The International Monetary Fund (IMF) predicts that the global economy will recover in 2021, with a growth rate of 5.5%. However, the recovery is expected to be uneven, with advanced economies recovering faster than emerging markets.

In Asia, China is expected to be the only major economy to see positive growth in 2020. The country’s economy is expected to grow by 1.9%, compared to a global contraction of 4.4%. Other countries in the region, including India and Indonesia, are expected to see a contraction in their economies in 2020.

Looking forward to 2023, the outlook for Asia’s economy is uncertain. The pandemic’s impact is likely to be felt for several years, with some sectors taking longer to recover than others. The recovery is also dependent on several factors, including the pace of vaccine distribution, the effectiveness of government policies, and the global economic environment.

There are reasons to be optimistic about Asia’s economic growth in 2023. The region’s large and growing consumer base provides companies with opportunities to tap into the market. The BRI is also expected to continue to attract investments, which will help to boost the economies of participating countries. Furthermore, Asia’s manufacturing sector is expected to continue to grow, with countries like Vietnam and Indonesia becoming attractive destinations for foreign investments.

However, there are also reasons to be cautious about Asia’s economic growth in 2023. The pandemic’s impact is likely to be felt for several years, with some sectors taking longer to recover than others. The region’s heavy reliance on exports means that any global economic slowdown will have a severe impact on the region’s economy. Moreover, rising geopolitical tensions, particularly between the United States and China have significant implications for the Asia-Pacific (APAC) region. As the two superpowers engage in a trade war, technological competition, and territorial disputes, the APAC region, which includes countries such as Japan, South Korea, Australia, and Southeast Asian nations, may face significant challenges.

One of the main concerns is the impact on trade. The United States and China are two of the largest trading partners for many countries in the APAC region. As the two countries impose tariffs and counter-tariffs, the region may face disruptions in supply chains, increased costs, and reduced trade volumes. The uncertainty caused by the trade war may also lead to a reduction in investments, as companies hold back on their expansion plans due to the uncertain environment.

The technological competition between the United States and China is also a cause for concern. The two countries are competing to become the dominant players in emerging technologies such as artificial intelligence, 5G, and quantum computing. The competition has led to tensions between the two countries, with the United States imposing restrictions on Chinese technology companies like Huawei and ZTE. The restrictions may affect the APAC region, as many countries in the region rely on Chinese technology for their infrastructure and services.

The territorial disputes between the United States and China, particularly in the South China Sea, may also have implications for the APAC region. The United States has increased its military presence in the region, conducting freedom of navigation operations in the disputed waters. The actions may increase tensions in the region and lead to a further escalation of the dispute.

Overall, the rising geopolitical tensions between the United States and China are likely to have significant implications for the APAC region. The region may face challenges in trade, investments, and technology, as the two superpowers engage in a competition for dominance. It is essential for countries in the region to take steps to mitigate the impact of the tensions and work towards finding a peaceful resolution to the disputes. Moreover, countries in the region may need to explore opportunities for diversification of their trade and investments, reducing their reliance on the two superpowers.

In conclusion, while there are concerns about the potential impact of various factors on the growth of the Asia-Pacific region, it is difficult to predict whether the region will experience a slowdown or recession in 2023. The region has shown remarkable resilience and adaptability in the face of significant challenges, such as the COVID-19 pandemic.

Several factors could contribute to a slowdown in growth, including the potential for rising inflation and interest rates, trade tensions, and geopolitical uncertainties. On the other hand, there are also factors that could contribute to sustained growth, such as increased investments in infrastructure, advancements in technology, and the growth of emerging markets.

Ultimately, the future of the Asia-Pacific region’s growth will depend on a range of factors, including domestic policies, international developments, and unforeseeable events. However, the region’s strong fundamentals and capacity for innovation and adaptability suggest that it is well-positioned to navigate the challenges and opportunities that lie ahead.

RPA Trends To Look Forward To

Published on
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6 March 2023

RPA has emerged as a game-changer for organizations looking to drive efficiency, reduce costs, and increase productivity.

Robotic Process Automation (RPA) has been growing rapidly over the past few years, and it has become an essential tool for many businesses looking to streamline their operations and improve efficiency. As the CFO of your organization, it is important to stay up to date with the latest RPA trends so that you can make informed decisions that can help your company stay ahead of the curve. Here are some RPA trends that CFOs should be aware of:

Increased Adoption of RPA

One of the most significant trends in RPA is its increased adoption by companies of all sizes and industries. According to a recent report by Gartner, the global RPA software revenue is expected to reach $1.89 billion in 2021, an increase of 19.5% from 2020. The report also predicts that the market will continue to grow at a compound annual growth rate (CAGR) of 18.9% through 2024.

The increased adoption of RPA is due to the significant benefits that it provides, such as increased efficiency, accuracy, and cost savings. As more companies adopt RPA, it is likely that the technology will become even more accessible, leading to further growth in the market.

Integration with Artificial Intelligence (AI)

Another trend in RPA is the integration with AI. While RPA focuses on automating repetitive and rule-based tasks, AI can help to enhance RPA by providing intelligent decision-making capabilities. By integrating AI into RPA, companies can take advantage of advanced analytics, natural language processing (NLP), and machine learning (ML) to improve the accuracy and efficiency of their processes.

For example, an RPA system could use AI to analyze customer feedback and sentiment to identify areas where improvements could be made. It could also use NLP to understand and respond to customer inquiries in real-time, without the need for human intervention.

Low-Code and No-Code RPA

Low-code and no-code RPA platforms are becoming increasingly popular, especially among companies that lack the technical expertise to implement RPA on their own. These platforms allow business users to build and deploy automation workflows without the need for programming skills. Low-code and no-code RPA platforms make it easier for businesses to implement RPA quickly, without the need for a large IT department. This can result in significant cost savings and improved efficiency.

Cloud-Based RPA

Cloud-based RPA is another trend that CFOs should be aware of. Rather than hosting RPA on-premises, companies can choose to use a cloud-based RPA platform. This can provide several benefits, such as scalability, flexibility, and reduced costs. Cloud-based RPA platforms can be accessed from anywhere, allowing employees to work remotely or on the go. Additionally, cloud-based platforms can be easily scaled up or down as needed, allowing companies to adjust their RPA capacity based on demand.

Hyperautomation

Hyperautomation is a term used to describe the integration of multiple technologies, such as RPA, AI, and ML, to automate entire business processes end-to-end. This approach can help companies to achieve significant efficiency gains, as it allows for the automation of complex processes that were previously difficult to automate.

Hyperautomation can be particularly beneficial for companies that have complex processes involving multiple systems and data sources. By integrating RPA with other technologies, such as AI and ML, companies can automate entire processes, from data collection to decision-making.

Increased Focus on Governance and Compliance

As RPA becomes more widely adopted, there is an increasing focus on governance and compliance. Companies must ensure that their RPA processes are compliant with relevant regulations and standards, such as GDPR and HIPAA. Additionally, they must implement appropriate governance processes to ensure that RPA is used ethically and responsibly.

As Robotic Process Automation (RPA) continues to revolutionize the way organizations operate, CFOs have become increasingly interested in its capabilities to drive efficiency, reduce costs, and increase productivity. Over the years, RPA has grown from a simple robotic tool to a more complex and intelligent system that can handle complex and repetitive tasks. In this article, we have explored some of the emerging trends in RPA that CFOs should look forward to in the near future.

In addition to these trends, CFOs should also take note of the growing trend of hybrid RPA solutions. Hybrid RPA combines the capabilities of both attended and unattended automation to enable greater flexibility and control. This means that organizations can use RPA tools to handle complex tasks that require human intervention while also automating repetitive and mundane tasks.

As RPA technology continues to evolve, CFOs should also look forward to greater integration with other emerging technologies such as blockchain and the Internet of Things (IoT). By integrating RPA with these technologies, organizations can achieve even greater levels of automation and drive better business outcomes.

Finally, CFOs should take note of the growing importance of cybersecurity in RPA. As RPA solutions become more sophisticated and handle critical business data, it is essential to ensure that they are secure and protected against cyber threats. CFOs should work closely with their IT teams to implement robust security measures and protocols to safeguard their RPA systems.

In conclusion, RPA has emerged as a game-changer for organizations looking to drive efficiency, reduce costs, and increase productivity. As RPA technology continues to evolve, CFOs should keep a close eye on emerging trends such as cognitive automation, cloud-based solutions, hybrid RPA, integration with other technologies, and cybersecurity. By leveraging these trends, CFOs can unlock even greater benefits from their RPA solutions and drive better business outcomes.

DCFO IWD Series 2023: Breaking Gender Stereotypes In The Workplace

Published on
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2 March 2023

Gender stereotypes have been a pervasive issue for far too long and breaking these stereotypes is the starting point for more women to pursue leadership roles.

Gender stereotypes have been pervasive in our society for centuries. These stereotypes are so deeply ingrained in our culture that they continue to influence our perceptions and expectations of men and women in the workplace. However, the world is changing, and there has been an increasing recognition that gender stereotypes are harmful, and they can prevent individuals from reaching their full potential.

Breaking the gender stereotype in the workplace is crucial for creating an environment where everyone can thrive regardless of their gender. To achieve this, organizations need to take proactive steps to address these stereotypes and create a culture of equality and inclusivity. In this article, we will explore the impact of gender stereotypes in the workplace and provide some practical strategies for breaking them.

The Impact Of Gender Stereotypes In The Workplace

Gender stereotypes in the workplace can have far-reaching consequences for individuals, organizations, and society as a whole. Stereotypes about gender roles can influence how people are perceived and evaluated, affecting their opportunities for advancement, job satisfaction, and even their mental health.

For example, women are often perceived as less competent and less committed to their careers than men, which can lead to lower salaries, fewer promotions, and less access to training and development opportunities. Similarly, men who don’t conform to traditional gender roles may be viewed as weak or lacking in leadership qualities.

These stereotypes can also have a detrimental impact on organizational culture. When women and men are held to different standards, it creates a culture of inequality and can lead to feelings of resentment and exclusion. This can result in lower employee engagement, higher turnover rates, and a negative impact on the company’s reputation.

Breaking The Gender Stereotype In The Workplace

Breaking the gender stereotype in the workplace requires a concerted effort by organizations to create a culture of equality and inclusivity. Here are some practical strategies for achieving this:

Provide unconscious bias training

Unconscious bias is a term used to describe the implicit attitudes and stereotypes that influence our perception and behavior. These biases are often unintentional, but they can have a significant impact on how we evaluate and interact with others in the workplace. Providing unconscious bias training to employees can help them become aware of their biases and how they can impact their decisions and behaviors. This training can also help employees learn strategies for overcoming their biases and creating a more inclusive workplace.

Encourage flexible work arrangements

Flexible work arrangements, such as telecommuting, part-time work, and job sharing, can help break down gender stereotypes by allowing both men and women to balance their work and family responsibilities. By offering these options, employers can create a more inclusive workplace that values the diverse needs of its employees.

Promote women into leadership roles

Women are often underrepresented in leadership roles, which perpetuates the stereotype that women are less capable or less interested in leadership. Organizations can break this stereotype by actively promoting women into leadership roles and creating a pipeline of female leaders. This can be achieved by providing mentoring and leadership development programs, as well as by setting targets and quotas for female representation in leadership positions.

Create a culture of flexibility

Creating a culture of flexibility is crucial for breaking down gender stereotypes in the workplace. This means that managers and colleagues need to be open to different work styles and schedules, and be willing to accommodate the needs of others. This can include offering flexible work hours, providing access to childcare facilities, and encouraging employees to take breaks and prioritize their mental health.

Celebrate diversity

Finally, celebrating diversity is essential for breaking down gender stereotypes in the workplace. This means valuing the unique perspectives and experiences of all employees, regardless of their gender. By creating a culture of diversity and inclusion, organizations can attract and retain top talent and create a workplace where everyone can thrive.

Gender stereotypes have been a pervasive issue in the workplace for far too long and breaking these stereotypes is the starting point for more women to pursue leadership roles. The number of CFOs in the world who are women is still below 20% which is not even a quarter. With female CFOs being such a rarity, it is important that businesses educate themselves about gender stereotypes and pinpoint internally; what is causing them to have more men in leadership positions? Once they notice this problem, they should come up with internal policies and work towards a workplace culture that is supportive of women. 

Financial Transformation – Key Trends And Drivers In 2023

Published on
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1 March 2023

Finance transformation in 2023 will be driven by a range of factors, including digitalization, data and analytics, ESG and sustainability, resilience and risk management.

As we move into 2023, the finance function is undergoing significant transformation. The digital revolution, the pandemic and its aftermath, and the need for businesses to be more agile and data-driven have all accelerated the pace of change. With that said, let’s take a closer look at some of the key trends and drivers behind finance transformation in 2023.

Digitalization And Automation

The finance function has been steadily moving towards digitalization and automation for some time now, but the events of the past few years have accelerated this trend. With remote work and distributed teams becoming the norm, the need for digital tools and systems that enable collaboration, communication and efficiency has become even more pressing.

In 2023, we can expect to see finance departments continuing to adopt new technologies such as AI, machine learning, and robotic process automation (RPA) to streamline processes and reduce costs. The use of cloud-based solutions and software-as-a-service (SaaS) models will also continue to gain momentum, enabling finance teams to access critical data and insights from anywhere, at any time.

Financial institutions will continue to focus on operational efficiency and cost control by automating previous manual and paper-driven processes. But the question is whether financial institutions are able to streamline processes to drive a bigger impact for customers and businesses?

“Financial services companies have traditionally been a target-rich environment for cybercriminals given their ownership of the vast volume of sensitive client and third-party information and of course money. As such, it is pertinent that data privacy and cybersecurity remain top-of-mind consideration in companies’ pursuit of digital transformation. This is achieved by adopting holistic security protection through scalable edge-enabled security solutions that improve both the security and observability of the network and application traffic, as well as the performance and reliability of your applications.

– Stephen Cumming, CFO, Edgio

“Against an increasingly competitive landscape where new entrants are offering enhanced digital capabilities, FSI players are currently hampered by aging legacy systems that diminish their ability to meet clients’ evolving needs. As such, the network infrastructure should be a key investment area. This will not only empower the organizations to remain scalable and keep pace with an increasing hostile cyber landscape but also in deploying emerging technologies – such as AI, machine learning, and blockchain.”

– Agnes Lim, CFO, Asia Pacific at NTT Ltd

“The best financial institutions harness the power of the entire organization to serve customers and businesses, who desire the same optimal consumer friendly experiences they get in their personal lives. When customer service is orchestrated via smart digital workflows that transcend people, departments and systems, financial institutions are able to deliver speed, convenience and transparency to drive fierce customer loyalty. Breaking down the digital and organizational silos will help drive greater productivity and enable financial institutions to create a model of operational resilience capable of withstanding unforeseen issues, like outages and cyberattacks.”

– Wee Luen Chia, Area Vice President and Managing Director, Asia, ServiceNow

Focus On Data And Analytics

As businesses become more data-driven, the finance function is increasingly being called upon to provide strategic insights and analysis. In 2023, we can expect to see finance teams placing even greater emphasis on data and analytics, using new tools and techniques to gain deeper insights into business performance and to forecast future trends.

This will require finance professionals to develop new skills and capabilities, such as data visualization, predictive analytics, and data storytelling. We can also expect to see increased collaboration between finance and other functions, such as marketing and operations, as they work together to leverage data and drive business growth.

ESG And Sustainability

Environmental, social, and governance (ESG) issues have become a top priority for businesses across all sectors, and finance teams are playing an increasingly important role in addressing these challenges. In 2023, we can expect to see finance departments taking a more proactive approach to ESG and sustainability, using data and analytics to identify opportunities for improvement and to monitor progress against targets. This may include the development of new financial instruments and models that support sustainable business practices, as well as the integration of ESG considerations into traditional financial reporting and analysis.

Resilience And Risk Management

The COVID-19 pandemic has highlighted the need for businesses to be more resilient and agile in the face of unexpected challenges. Finance teams will continue to play a critical role in supporting this effort, with a focus on risk management, scenario planning, and stress testing. In 2023, we can expect to see finance departments placing even greater emphasis on risk management and resilience, using new tools and techniques to identify and mitigate potential risks. This may include the development of new risk models and stress tests, as well as the adoption of more advanced analytics and simulation tools.

Talent Development And Upskilling

As the finance function undergoes transformation, it is essential that finance professionals are equipped with the skills and capabilities needed to succeed in the new environment. In 2023, we can expect to see a greater focus on talent development and upskilling, with finance departments investing in training programs and initiatives that enable their teams to acquire new skills and adapt to new ways of working. This may include the development of new career paths and job roles, as well as the adoption of new training methodologies such as gamification and microlearning. It will also require a greater emphasis on diversity and inclusion, as finance departments seek to build teams that reflect the wider range of perspectives and experiences needed to drive innovation and success in the new digital age.

Where Should Finance Leaders Focus Their Digital Transformation Efforts On?

With so many rising trends and priorities that finance leaders need to take note of, where then, should they focus their digital transformation efforts? Let’s take a look at the various perspectives of finance leaders in the market: 

“Investment in key capabilities such as networks and cloud migration will allow institutions to reap a plethora of business operational benefits. However, FSI players are hampered by limited access to relevant technologies, security, and expertise. The inability to streamline processes will translate to lost business and struggles with the increasingly complex business environment. In this regard, a partnership with service providers can help organizations to maintain the infrastructure and to work towards making it future proof.”

– Agnes Lim, CFO, Asia Pacific at NTT Ltd

“New technologies, such as edge platforms, can empower financial institutions in overhauling operations. Edge platforms allow financial organizations to bring security to the edge without compromising performance and productivity. These platforms proactively address advanced threats at the edge, providing business analytics and expedites the resolution of operational challenges. With these business intelligence, improved agility, financial organizations can focus on providing superior user experience thus promoting business growth.”

– Stephen Cumming, CFO, Edgio

“With the rise in scams, data leaks and unauthorized transactions, people are gradually losing trust in financial services. At Mastercard, security is baked into the foundation of every product and service. Any business in the financial sector today must put data privacy and security at the core of its digital transformation agenda. With privacy-enhancing technologies (PET) and other emerging technologies like distributed AI, companies have a wider range of solutions that improve data utility without compromising on individual privacy or customer experience. Financial services should focus on implementing a combination of these technologies to instill trust in every digital transaction”.

– Safdar Khan. Division President, Southeast Asia, Mastercard

In conclusion, finance transformation in 2023 will be driven by a range of factors, including digitalization, data and analytics, ESG and sustainability, resilience and risk management. And depending on the services that businesses provide, they should look closely at their consumers’ needs and measure for themselves where they should invest their digital transformation efforts in. 

All You Need To Know About The New Breed Of CFO

Published on

28 February 2023

Organizations will start to look at the modern skill sets of today’s finance executives rather than providing job descriptions for the role.

In recent years, the role of Chief Financial Officer (CFO) has undergone significant changes. Gone are the days when CFOs were simply responsible for managing a company’s finances. Big things are expected from modern CFOs and today’s CFOs understand numbers and produce reliable reports, but their role has expanded appreciably.

What should we anticipate from this new generation of CFOs? Organizations will start to look at the modern skill sets of today’s finance executives rather than providing job descriptions for the role. This is because some of the abilities listed in the job descriptions are dated, while the skills that are not, are the ones guiding businesses into the future. Today’s CFOs are expected to have a much broader skillset, encompassing strategy, technology, risk management, and more. In this article, we’ll explore the new breed of CFO and what it takes to succeed in this critical role.

The Evolution of the CFO Role

The CFO role has evolved significantly in recent years, thanks in large part to the increasing importance of technology in the workplace. Today’s CFOs need to be comfortable working with complex systems and data analytics tools, and they must be able to provide strategic insights based on the data they collect.

Another factor driving the evolution of the CFO role is the growing emphasis on risk management. In the wake of the 2008 financial crisis, companies have become much more focused on managing risk, and CFOs are at the forefront of these efforts. Today’s CFOs must be able to identify potential risks and develop strategies to mitigate them, whether they relate to financial, operational, or other areas of the business.

The New Skills Required of CFOs

Given these changes in the CFO role, it’s not surprising that the skills required to succeed in this position have also evolved. Today’s CFOs must be able to do much more than just crunch numbers. Here are some of the key skills and attributes that are now essential for CFOs:

Strategic Thinking

Today’s CFOs must be able to think strategically and provide insights that go beyond traditional financial analysis. They must be able to understand the broader business landscape and provide guidance on issues such as mergers and acquisitions, market trends, and competitive pressures.

Technology Savvy

In today’s digital age, technology is essential for any business to thrive. CFOs must be comfortable working with a wide range of tools, including data analytics platforms, enterprise resource planning (ERP) systems, and other software applications. They must also be able to use technology to drive innovation and streamline processes.

Risk Management

As noted earlier, risk management has become a critical focus for many companies, and CFOs must be able to play a key role in this area. They must be able to identify potential risks, develop mitigation strategies, and work with other stakeholders to ensure that the company is adequately prepared for any eventuality.

Communication Skills

CFOs must be able to communicate effectively with a wide range of stakeholders, from investors and analysts to employees and customers. They must be able to explain complex financial information in a way that is easy to understand, and they must be able to inspire confidence and trust.

Leadership

Finally, today’s CFOs must be strong leaders who can inspire and motivate their teams. They must be able to set clear goals, provide guidance and support, and hold their teams accountable for delivering results.

The Importance of Soft Skills

While the technical skills outlined above are essential for any CFO, it’s important not to overlook the importance of soft skills. In fact, many experts believe that soft skills such as emotional intelligence, empathy, and resilience are becoming increasingly important for CFOs.

For example, CFOs must be able to navigate complex interpersonal dynamics within the organization, build relationships with stakeholders, and manage change effectively. They must also be able to deal with the stress and pressure that comes with the job, and maintain a positive outlook in the face of challenges and setbacks.

The Role of the CFO in Driving Digital Transformation

One of the key areas where the CFO can make a significant impact is in driving digital transformation within the organization. By leveraging technology and data analytics, CFOs can help to streamline processes, improve efficiency, and drive innovation. For example, CFOs can use data analytics tools to accurately predict what the company’s cash flow will be over the next week, month or even year so that they can take the right financial decisions to keep the business running smoothly and to secure its future.

As companies pursue strategies for digital transformation in finance, CFOs are the key drivers of this digitalization. Digital technologies will transform every sector by 2026 and will continue to impact the future of finance. As a result, CFOs need progressive solutions to ease the transition. This also means that CFOs will be called upon to work closely with IT departments as companies progress with their digital transformations. 

However, The Fundamentals Of CFOs Remain The Same

Despite all the differences exhibited by the new breed of CFO, financial executives still base their work on traditional, critical foundations. When it comes to balance sheets and debt repayments, the buck still stops with them. CFOs still manage the substantial work of reporting and forecasting, so stakeholders have accurate information. 

Also, the need for simplicity and cost-effectiveness in finance operations will never disappear, even if the methods for achieving them may change. The new CFOs typically embrace flexibility and scalability. They resemble well-rounded entrepreneurs who are willing to customise finance departments while they adopt global best practices.

Accounting Software Trends In 2023

Published on
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27 February 2023

Businesses that embrace these trends and choose the right accounting software provider will definitely see improvements to their overall efficiency and productivity.

The world of accounting software is constantly evolving, with new technologies and trends emerging every year. Staffing shortages and other labor market issues that businesses are currently dealing with can be seen as catalysts for accelerating the adoption of exciting new technology-based solutions that are becoming more and more important to company. Accounting departments may want to explore automation, make changes to systems and reporting, or outsource some parts of the workflow. As we move into 2023, there are several key trends that are shaping the future of accounting software. In this article, we will explore these trends and what they mean for businesses of all sizes.

1. Cloud-based Accounting Software

One of the biggest trends in accounting software is the move towards cloud-based solutions. This means that the software is hosted on remote servers, and can be accessed from anywhere with an internet connection. This trend has been gaining traction over the past few years, and is expected to continue into 2023 and beyond. Cloud-based accounting software offers several benefits over traditional desktop-based solutions. For one, it allows for easy collaboration between team members, as everyone can access the same data in real-time. It also eliminates the need for businesses to maintain their own servers and IT infrastructure, as everything is hosted in the cloud.

2. Artificial Intelligence and Machine Learning

Another major trend in accounting software is the use of artificial intelligence (AI) and machine learning (ML). These technologies are being used to automate many of the tasks traditionally performed by accountants, such as data entry and categorization. For example, AI-powered accounting software can automatically categorize expenses based on keywords or patterns, reducing the amount of time and effort required for manual data entry. ML algorithms can also be used to identify trends and patterns in financial data, allowing businesses to make more informed decisions about their finances.

3. Integration with other Business Systems

As businesses become more complex and specialized, there is a growing need for accounting software to integrate with other business systems. This includes everything from CRM software to inventory management systems. By integrating accounting software with other business systems, businesses can streamline their operations and reduce the amount of manual data entry required. This also allows for a more holistic view of the business, as all data is stored in a centralized location and can be accessed by all relevant stakeholders.

4. Mobile Access

In today’s fast-paced business world, it’s more important than ever for accounting software to be accessible on-the-go. This means that accounting software providers are increasingly offering mobile apps and mobile-friendly web interfaces. Mobile access allows business owners and managers to stay on top of their finances no matter where they are. They can view financial reports, approve expenses, and even send invoices directly from their mobile device.

5. Greater Emphasis on Security

With the increasing amount of sensitive financial data being stored in the cloud, security is more important than ever. Accounting software providers are responding to this need by placing greater emphasis on security features. This includes everything from two-factor authentication to data encryption. Many providers are also conducting regular security audits and offering training to help businesses stay up-to-date on the latest security best practices.

6. Customization and Flexibility

Finally, accounting software providers are recognizing the need for customization and flexibility. Businesses come in all shapes and sizes, and each has unique accounting needs. To meet these needs, many accounting software providers are offering customizable dashboards and reports. This allows businesses to tailor the software to their specific needs and workflows. Additionally, some providers are offering flexible pricing models, such as pay-as-you-go or subscription-based pricing. This allows businesses to choose the pricing model that works best for them, rather than being forced to pay for features they don’t need.

7. Capitalizing On Data

2023 will present possibilities for accounting departments to achieve their objectives in new and better ways, despite the obstacles that lie ahead. Data is still a big deal for organizations across all sectors, and many businesses are working hard to find ways to harness data and identify lucrative data streams. Data can be used in a variety of ways by financial reporting and accounting departments, including customer analysis, evaluating several company lines to determine which are more profitable, and cost-cutting.

Due to the numerous demands on their time, accounting professionals may become mired in the process without pausing to consider how the data they utilize can be used. Thoughtful accountants will, however, take the time to consider the possibilities, both in terms of what they may learn and how they might use data to improve system and process efficiencies.

As we move into 2023, the accounting software landscape is evolving rapidly. Cloud-based solutions, AI and ML, integration with other business systems, mobile access, security, and customization and flexibility are all major trends that are shaping the future of accounting software. Businesses that embrace these trends and choose the right accounting software provider will definitely see improvements to their overall efficiency.

Creating A More Productive Environment For Finance Teams

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27 February 2023

Creating a more productive environment for finance teams requires a comprehensive approach that focuses on various key areas to successfully cultivate it.

Finance teams are an integral part of any organization, responsible for managing financial transactions, monitoring budgets, and providing critical financial insights to decision-makers. However, with the ever-increasing complexity of financial regulations and the need for greater accuracy and efficiency, finance teams are under constant pressure to deliver results. To create a more productive environment for finance teams, organizations need to focus on a few key areas.

1. Streamline Processes

One of the most significant impediments to productivity is inefficient and time-consuming processes. Finance teams need to streamline their workflows to eliminate bottlenecks and reduce the time spent on repetitive and manual tasks. This can be achieved through automation, which can help reduce errors, speed up processes, and free up time for more critical tasks. For instance, organizations can automate tasks such as data entry, invoice processing, and reconciliation, enabling finance teams to focus on analyzing data and providing insights.

2. Invest in Technology

Technology has revolutionized the way finance teams work. From accounting software to financial management tools, technology can help streamline processes, increase efficiency, and provide real-time insights into financial performance. Investing in the right technology can help finance teams stay ahead of the curve, enabling them to analyze data faster and more accurately, identify patterns and trends, and make informed decisions. For example, cloud-based accounting software can provide real-time access to financial data, allowing finance teams to collaborate seamlessly and access information from anywhere, at any time.

3. Provide Training and Development

To create a more productive environment, organizations need to invest in the development and training of their finance teams. This can help improve their skills, knowledge, and abilities, enabling them to perform their tasks more efficiently and effectively. Providing training on financial regulations, technology, and industry trends can help finance teams stay up-to-date with the latest developments, ensuring that they are always operating at the highest level of proficiency.

4. Foster a Positive Work Environment

The work environment can have a significant impact on the productivity and morale of finance teams. A positive work environment that promotes collaboration, open communication, and teamwork can help boost productivity and engagement. Creating a culture that values employee well-being and work-life balance can also help reduce stress levels and increase job satisfaction. Organizations can foster a positive work environment by providing a comfortable workspace, flexible schedules, and opportunities for professional development and growth.

5. Implement Clear Goals and Objectives

Clear goals and objectives are essential for driving productivity in finance teams. Providing a clear roadmap for what needs to be accomplished and how it will be measured can help finance teams stay focused and motivated. This can be achieved through the implementation of key performance indicators (KPIs) and regular performance reviews. KPIs should be specific, measurable, and achievable, enabling finance teams to monitor progress and adjust their strategies accordingly.

6. Communicate Effectively

Effective communication is crucial for creating a more productive environment. Finance teams need to communicate effectively with other departments, stakeholders, and senior management to ensure that everyone is on the same page. Clear and concise communication can help prevent misunderstandings and errors, enabling finance teams to work more efficiently and effectively. Organizations can improve communication by establishing regular meetings, providing clear guidelines, and using collaborative tools such as project management software.

7. Embrace Continuous Improvement

Continuous improvement is vital for creating a more productive environment for finance teams. Organizations need to encourage their finance teams to identify areas for improvement, experiment with new technologies and processes, and implement changes that can drive greater efficiency and accuracy. This can be achieved through regular performance reviews, feedback sessions, and employee engagement initiatives.

In conclusion, creating a more productive environment for finance teams requires a comprehensive approach that focuses on streamlining processes, investing in technology, providing training and development, fostering a positive work environment, implementing clear goals and objectives, communicating effectively, and embracing continuous improvement.

Why Automation Progress Is Likely To Stall In 2023?

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17 February 2023

In this new era of humans and machines, talent shortages and the demand for technical talents that are in short supply are serious problems.

The world has changed in terms of automation. Notwithstanding the substantial advantages of automation that have been established over the previous few years, the pace of automation will slightly slow down in 2023. A more sensible strategy is being driven by economic uncertainty, which is putting the brakes on change to concentrate on key business drivers like resilience and efficiency. For those with the fortitude to adapt to 2023’s reality while still doubling down on automation to gain a competitive advantage, their efforts will be rewarded.

Unfortunately, the pace of automation will probably slow down due to a lack of skilled workers. The major problem with skill shortages is that there aren’t enough individuals with the skills needed to design and maintain automation. These issues include a slower learning curve for business developers to master low-code development tools, skill shortfalls for expert developers across the AI spectrum, and a lack of qualified analysts and project managers for automation initiatives. Although there will always be a skills gap, 2023 will be particularly challenging.

When it comes to the current skill gaps in the APAC region, many business owners and finance leaders are forced to embrace a deep understanding of digital tools, from data collection to analytics and real-time feedback directly to the operating environment. This requires going beyond the fundamentals of programming. Also, emphasis needs to be placed on how people, particularly employees, will be taught to communicate with machines and systems. The ability to collaborate with “digital” workers to complete tasks will determine an employee’s ability to be productive in a highly linked and intelligent environment.

Many financial directors are beginning to realize that automation does not entail replacing people in their organizations. When firms really start the process, they frequently discover that their human employees are much more valuable than they initially imagined, which is why they need to be upskilled. Finance executives should see intelligent automation as a resource that can rethink company models, enable the attainment of higher quality results, and free up staff for higher-level duties.

Many functions, including contact centers and services, are being automated, but entire job roles are not being replaced. When senior executives consider a worker, they should consider how automation, artificial intelligence, and machinery may assist workers in performing their duties. What kind of software and intelligence will make that the most successful? Business executives must also question themselves regarding what abilities are required to complete such duties. These talents could be provided by external employees, but in the current digital age, bots with specialized skills are increasingly taking on these activities, and people will be needed to make sure that the bots are carrying out their instructions.

So where do you find these people? Must you necessarily go “out with the old and in with the new”? With the talent pool becoming more competitive, companies should not risk removing their current employees and hiring new ones. What business leaders should be doing is upskilling their workforce. Top executives should first evaluate the skill gaps that exist among their workforce and establish priority areas. This is due to the fact that developing a successful upskilling strategy will only be possible if the organization can pinpoint the precise capabilities it needs both now and in the future.

The corporation should then ask each employee what talents they are most interested in obtaining and how they see their career developing within the business. Making employee development plans is the greatest approach to collect this data. CEOs must make sure that the professional objectives of their staff complement those of the business. Plans for employee development will help executives understand a worker’s expectations for their professional future. Executives can then assign the appropriate staff to the appropriate training resources. Also, the company will be able to provide their staff with greater feedback and empower them to develop career goals that have a better likelihood of success inside the corporation.

Also, businesses should approach their upskilling initiatives from a collaborative, win-win perspective. With this strategy, businesses should give their staff members enough time to learn during working hours. Employees can completely commit to upskilling and advancing their abilities without significantly compromising their own time by setting aside time for learning. To make upskilling for employees simpler and more enjoyable, organizations should use mobile learning strategies in addition to dedicating time for it. Upskilling will directly benefit the company once a worker has mastered and is using a profitable talent.

The abilities obtained by one team member who participates in a company-sponsored upskilling program should be advantageous to the whole team. Setting up a post-training engagement where the trained person shares their newfound knowledge with the rest of the group is therefore a fantastic idea. A post-training program creates a clear channel for knowledge transfer within the firm, ensuring that businesses achieve a solid long-term return on investment. Businesses will gain from the investment in upskilling even if the trained employee receives better job offers and departs from your organization in this way. A post-training program also aids newly trained employees in comprehending the skills they have learned.

In this new era of humans and machines, talent shortages and the demand for technical talents that are in short supply are serious problems. If companies want to expand on the basis of AI and analytics technologies in the future, they may need to develop new ways to source and improve the capabilities of their current workforce due to the predicted expansion of job openings outpacing the availability of competent individuals.

Financial Consolidation Challenges Companies Face

Published on

14 February 2023

When creating a financial consolidation strategy, it is important to ensure that all automated processes and tools are integrated with one another. 

Errors in financial consolidation arise from an organization’s increase in size and complexity as well as the use of obsolete or insufficient technologies by the finance department. As a result, a series of mistakes, inaccurate data, and duplications occur that may compromise the company’s compliance and the truthfulness of their remarks. As the company’s demands change, an integrated financial system guarantees that business operations can scale with the company’s growth rate.

A purpose-built consolidation system also changes the statements from a compliance requirement into an active strategic asset, enabling stakeholders, investors, and decision-makers to take initiatives knowing exactly how the company’s finances are doing. Following that, the typical financial consolidation issues that companies may encounter in 2023 are as follows:

Not Automating Financial Consolidation Processes

Some advantages of automation are plain to perceive. The company’s staff can devote more time to using their abilities in careful analysis and less time to laborious labor. Others, however, are less obvious. Various typical causes of inaccuracy are eliminated through automation. Human error is unavoidable when manual processes are used. Even the most meticulous and well-organized finance teams can make errors. Inaccuracies in financial reporting can be expensive and potentially humiliating.

The inevitable human error that results from incorrect data entry, copy/paste errors, or even adjustments to source or destination file formats that leads to unexpected (and inaccurate) findings when creating intercompany accounts can be greatly reduced by automating the close and consolidation processes. Companies  can use automation to more clearly define protocol compliance and who has access to confidential financial data of the business. By monitoring user behavior and specific transactions, this not only avoids errors but also lowers the chance of fraud.

Automation improves real-time visibility and expedites the closing process. Leaders are keen to obtain information as quickly as possible in a company environment that is changing swiftly without losing accuracy. To improve corporate agility and responsiveness, many have shifted to more frequent reporting and planning cycles. The finance team invariably becomes mired down with time-consuming, repetitious duties when the company relies on manual methods to generate monthly reports. Automation greatly reduces friction in the procedure, speeding up the production of outcomes.

Not Using The Right Financial Consolidation Tools

Finance teams use a variety of financial planning tools, including the ERP platform, accounting software, and, maybe excessively, Microsoft Excel. Poor integration is the main issue brought on by these multi-tool processes. Many of these platforms struggle to “speak to each other,” which results in the use of mismatched file formats and a lack of data portability and visibility between the tools.

This explains why financial consolidation uses spreadsheets so frequently. From several financial sources, data is physically downloaded or exported, then manually combined within an Excel spreadsheet. This requirement can lead to problems with collaboration and visibility amongst remote stakeholders, as well as wasteful in terms of the time required to develop statements and the duplication of effort. It is best for businesses to invest in a software or system that will combine the existing tools and procedures in order to prevent this.

Select a piece of software that will facilitate the acceleration and simplification of financial consolidation procedures. Additionally, the software finance leaders choose should be adaptable and able to take into account the numerous foreign reporting standards as well as the manner the organization operates. To help the business become more focused and agile, look for software that enables easy interaction with a performance management platform.

In order to provide a higher level of transparency in their reporting, it is imperative that the company’s financial close and consolidation software be well integrated with each one of them. Finance teams should also be able to trace all of the company’s financial results back to the original data sources. 

Changing Reporting Requirements

Reporting structures will alter along with external influences or as an organization’s internal structure evolves. In addition to economic conditions and market trends (for prediction and scenario planning purposes), external influences can include statutory reporting requirements. Acquisitions, mergers, joint ventures, and the adoption of new software systems and procedures are examples of internal forces.

The restrictive financial consolidation systems that rely on manually updated spreadsheets and data input are all strained by these changes. The procedure is cumbersome and ineffective because of the time needed to adapt to changes inside the system. Establishing an agile process with built-in scalability and responsiveness will enable companies to swiftly modify their reporting requirements to meet with current accounting standards and maintain the practices in line with evolving business needs.

Accuracy of data is crucial in the close and consolidation process. By taking note of these 3 key challenges, businesses will be able to take the necessary steps to further streamline their processes and enhance accuracy in their reporting. Now that we have entered the age of automation and technology, having too many tools that do not work cohesively with one another can also pose a problem. When creating a financial consolidation strategy, it is important to ensure that all automated processes and tools are integrated with one another so that the finance team does not spend too much time on just figuring out how to get the data they need. 

SMEs, The Key To Indonesia’s Growth 

Published on

10 February 2023

As more Indonesians seek to remain competitive in a world filled with disruptions, SMEs that are able to adapt and embrace digitalization will undoubtedly prosper.

The current state of Indonesia is unparalleled. A new middle class is emerging, and the advent of digital technology has created chances for business startups. SMEs (Small and Medium-sized Enterprises) currently number over 62 million, or one SME for every five Indonesians and  61.5 million of these are microbusinesses. The growth of these small businesses into larger ones will be a key factor in the future prosperity of the nation.

Many SMEs in their early stages lack a strategic growth plan. A roadmap must be created immediately to assist more SMEs in scaling up effectively. The last few years, digital transformation has been the key emphasis. However, even with digital assistance, this is not necessarily the solution for micro-enterprises because they lack the management or operational capabilities to expand. So what is hindering Indonesian SMEs from growing into well-established businesses?

Lack Of Business Knowledge In Scaling Up & Becoming Established Companies

Unfortunately, a lot of firms in Indonesia are unsure of their real position in terms of growth. What’s more, they lack a clear understanding of their own potential. Most SME owners, especially those who are in the beginning phases, are unable to respond when asked what attitudes and talents they would need to advance.

These companies frequently lack the resources necessary to adopt a strategic strategy to growth because they are SMEs. Many new firms struggle to expand because they can’t figure out who their ideal customers are, what kind of goods or services they require, or how to provide those demands profitably.

When SMEs are able to find their product-market fit, scalability becomes a problem. They must develop a scalable system for crucial resources and processes in order to deliver their items to their target market. Therefore, the benefits of digital transformation will be minimal for both categories. When it comes to customer value proposition, team development, manufacturing, sourcing materials, and other areas, it is evident that SMEs require fundamental training in these areas as they are still lacking direction and vision towards their business objective. 

Emerging businesses have different issues to deal with. Owners of businesses at the emerging stage feel successful since they have already experienced some growth. Owners have established themselves and are frequently obtaining affirmation from their industry peers. However, despite their efforts, a lot of business owners at this point experience stagnation, which they mistake for a sign that they have achieved their pinnacle. Following this, many business owners assume that there is no longer room for growth in their particular market segment. Some people risk losing their concentration by growing their firm and taking on new tasks, sometimes even outside of their original field.

The key issue in the emerging stage is to stay focused while delving deeply into their product, knocking on doors, and creating new sales channels along the way. Businesses right now require assistance in developing a strong sales channel across the nation’s regions in order to increase their sales coverage. Another thing that is preventing businesses from growing is simply their inability to digitize processes. 

Inability To Digitalize

It is well known that Indonesia continues to struggle with a lack of financial literacy, which regrettably also affects SME owners. A major barrier to firms digitalizing their operations is a lack of understanding on how to acquire technologies or software and, more importantly, how to use it. Because of this gap, they are actually unable to fully benefit from participation in the changing economy and realize their full potential.

Even if business owners are aware of the benefits of digitalizing their operations and have a plan in place, they might not have qualified staff to implement it. Such workers are not equipped to actively participate in and support digitalization efforts. Unfortunately, there is no quick fix for this problem. To motivate their staff to propose and carry out digitalization procedures, Indonesian businesses must foster a long-term innovation culture and existing workers must also receive training to make this possible. Due to the fear of rationalization or their comfort with the status quo, many employees today have deep-seated apprehensions regarding automating their business operations.

However, if SME owners want to expand their firm and weather the economic storm, they must recognize the importance of providing their staff with the training and skills they need to support the company’s digitalization objectives. In order to tackle skill shortages, the Indonesian government should make more and more efforts to promote this initiative and develop more skilled workers.

Helping SME Growth In Indonesia 

The Indonesian government is actively supporting the growth of these enterprises by upskilling their citizens and providing training programs. These were efforts put in place by the Ministry of Industry and the Ministry of Trade in response to these problems. Additionally, the government is constructing new IT infrastructure to improve connection, boost competition, and support the ongoing development of Indonesia’s digital economy.

Players in the private sector also have a special chance to fill market shortages. It is  observed that fintech is an emerging market trend in Indonesia for start-ups and may offer chances to support SME growth through distinctive and innovative solutions. In fact, a large number of online payment channels, many of which are already active in Singapore and Malaysia, have recently announced their intentions to enter new ASEAN markets, especially Indonesia, in order to aid SMEs in their digital financial expansion by providing a SME-facing platform. With international companies opening doors for SMEs in Indonesia, many are hopeful that their local economy will continue to flourish and grow in the next few years. 

Scaling Up SMEs

Digitalization is the key focus point for SME growth in 2023 and with these six key areas, Indonesia’s SMEs will thrive: 

  • Increase sales by utilizing fresh marketing avenues and creating product and service releases that are informed by market knowledge.
  • Manage operations to increase profitability by streamlining the procurement process, improving the supply chain, and keeping an eye on prices.
  • Organize cash by anticipating liquidity issues, budgeting for costs and cash flow, and investigating digital financing options.
  • Banking may be made simpler by using data-based funding decisions.
  • Manage Staff by developing talent, simplifying and automating payroll, and streamlining employee management
  • Obtain finance from abroad and establish contacts with customers and suppliers to expand internationally

It will take a comprehensive strategy that prioritizes integrating digital transformation throughout the entire process to assist SMEs in expanding their operations and pursuing growth. As more Indonesians seek to remain competitive in a world filled with disruptions, SMEs that are able to adapt and embrace digitalization will undoubtedly prosper.

Value Creation, A Key To Business Success

Published on

6 February 2023

Implementing value creation in an organization is an increasingly emerging and viable approach in combatting the current disruptive market environment.

The most successful businesses recognize that generating value for customers, staff, and shareholders is the primary goal of any enterprise and that the interests of these groups are inexorably intertwined. As a result, it is impossible to create sustainable value for just one group without also doing so for all of them. The creation of value for customers should be the main priority, but this cannot be done without selecting, developing, and rewarding the proper personnel as well as without providing shareholders with consistently favorable returns.

What exactly does value creation mean? It involves creating goods and offering services that clients continuously find beneficial. In the modern world, such value creation often relies on the development of novel products and processes as well as the ever-increasing speed and accuracy of recognizing specific client needs. However, businesses can only develop and provide top-notch service if they harness the devotion, vigor, and creativity of their workforce.

Therefore, value must be produced for those employees in order to inspire and empower them. Employee value involves being treated with respect and having a say in decisions. Additionally, strong remuneration prospects, ongoing training, and development chances are valued by employees. Generating value for investors entails continually providing them with significant returns on their investment. In general, this calls for both rapid revenue growth and enticing profit margins. These, in turn, can only be attained if a business offers consistent value to customers.

If value creation is the goal of business, then each organization’s mission should be outlined in relation to its main value-adding endeavors. Although it may seem clear, many managers and strategists act as if a company’s daily operations are unimportant and would much rather focus on reaching short-term financial objectives. Although shareholders’ wealth, profit growth, and return on investments are intended to be addressed by executives, the most prosperous businesses recognize that these metrics shouldn’t be the main focus of strategic management. The incentive for aiming for (and hitting) the genuine target, i.e., optimizing the value provided for the main stakeholders of the organization, is achieving favorable financial performance.

Ironically, a corporation is least likely to maximize financial returns over the long term when it views itself as a financial engine that seeks to produce alluring financial returns. Finance professionals frequently wind up rearranging a portfolio of assets in a fruitless search for “growing firms” or “better returns,” with little to no grasp of the fundamentals of value creation in the companies they are buying and selling. Alternatively, attempts to make money without providing superior value can result in lost revenue, a long-lasting customer aversion, and corporate embarrassment, as was the case with the automobile service chain.

Value Creation For Customers

Giving value results in receiving value. Only by offering both consumers and staff excellent value will an organization be successful. When a company can’t provide value to both its shareholders and its clients, it fails. At one extreme, you might develop a product that is highly valuable to you but has little use for clients. For instance, even if a corporation creates a high-tech product at a great cost, it may not succeed if consumers do not see a need for it. Such companies have not added value, hence they are not serving their customers.

The other extreme offers clients value but has no benefit for business owners. This is what business owners do when they sell their goods or services for a price that is close to or less than their costs. The business is tremendously active but generates little revenue or cash flow. To support this, the owner would need to locate another source of value. This might work if it’s a part of a wider price plan that generates profits down the road, but more often than not, these products obliterate corporate profits. Financial analysis has shown that many supposedly “excellent ideas” end up becoming commercial failures.

It is imperative to understand that; “You get value when you give value”. It’s simple to get carried away in the excitement of a potentially excellent concept, but business executives need to take the time to evaluate it and do a financial analysis. Every excellent concept must be viewed through the eyes of the customer, as people buy items that correspond to who they are, who they want to be, or both.

A Successful Value-Creation Strategy

Real value creation, long-term growth, and profitability happen when businesses create a steady stream of goods and services that provide distinctive advantages to a specific target market. This means that a business must set up a long-lasting value generation strategy if it wants to keep its position as an industry leader.

When customers or investors purchase shares in a company, they are not basing their partnerships on a specific product or group of products. Instead, both groups are expressing their confidence that the business will keep refining its procedures so that it can capitalize on new technology and shifting consumer demands to provide beneficial, lucrative goods and services. The foundation of any well-run organization’s worth to customers and the foundation of its valuation by shareholders is its capacity to grow resources and successfully match them with opportunities. The skills and drive of the company’s personnel serve as the foundation for this value generation process.

Successful value creation techniques in the information economy typically rest on a few key tenets, including:

  • Innovation in products and processes
  • Recognizing the changing needs of clearly defined customer segments in depth and in real-time (usually database enabled)
  • Utilizing new technologies in established markets 
  • Leveraging technological advancements or legal changes to open up new markets
  • Reorganizing industry and business value chains
  • Establishing mutually beneficial relationships with clients, staff, and suppliers

Implementing value creation in an organization is an increasingly emerging and viable approach in a climate of rapid economic change — in which long-term relationships and joint partnerships must be founded on mutual understanding, in which employees must be dedicated to providing quality service and driving continuous innovation, in which customers have access to more and more information.

For financial executives and business leaders who are interested to find out more about value creation, you can register for DigitalCFO Asia’s Executive Roundtable in partnership with LucaNet here.

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