A Small Business CFO’s Practical Approach to New Technologies
Large companies are firmly embracing robotic process automation (RPA), leveraging sophisticated data analytics and visualization tools, and exploring the use of blockchain and other new technologies. The media say small and medium-sized enterprises (SMEs) must also proactively embrace these new technologies or risk being competitively disadvantaged.
However, for small organizations, enduring the challenges and uncertainties of COVID-19 for the last year and a half has taken a toll. As a result, the priority is more existential. As a small business CFO, how do you navigate toward business recovery? Moreover, how do you ensure the security, privacy, and quality of data as cybersecurity breaches continue to skyrocket? The following are a few practical considerations as waves of new technology continue coming our way.
Business Stabilization
A small business CFO’s number-one priority is to navigate through the intense and ongoing headwinds of COVID-19 — including finding and retaining talent, overcoming supply chain glitches, negotiating fair terms with aggressive customers, and managing cash. Until management stabilizes the business, worries about the next wave of technology are somewhat meaningless.
Enhanced Data Security
A data security breach is one of the CFO’s biggest nightmares. A small business I know of was tight on cash, as many SMEs. Due to poor controls, it was tricked into sending vendor payments to a bad actor’s account. Unfortunately, the company could not recover. Malware attacks, especially ransomware attacks, are on the rise. To prevent harm to your network and mitigate risk, consider requiring multifactor authentication to access company data, encrypting email, securing email attachments, and implementing other best practices. In addition, revisit cash management and other controls, acquire adequate cyber insurance coverage, and develop contingency and recovery plans in case a cyberattack does happen.
Maximizing Benefits
For many SMEs, the cost of investing in and maintaining their enterprise resource planning (ERP) system is high. Many managers and owners don’t receive what they need to run the business effectively. Due to inadequate training, users aren’t leveraging the ERP system’s full capabilities. The root cause may also be system complexity, poor-quality data, or insufficient reporting capabilities. Leveraging their inquisitive and process-oriented natures, CFOs are well-positioned to analyze the status quo, identify opportunities, and allocate budget for system enhancements and training. By doing so, they can ensure existing technology is delivering an appropriate “bang for your buck.”
Digital-Savvy Mindset
CFOs must set an appropriate “tone at the top’” by demonstrating a willingness and desire to upskill in technological areas. Indeed, at many SMEs, the CFO has oversight of the IT function and is the de facto chief information officer. Therefore, as CFO, it is imperative to build your knowledge of new technologies and trends to determine which tools will be most effective for your organization.
To cultivate a digital-savvy mindset, ask the right questions when considering new technologies. For example, could RPA benefit the team? Consider how data analytics and visualization tools are becoming more powerful and easy to use. Could you leverage data analytics and visualization tools to enhance finance and other departments’ storytelling abilities, enabling cross-functional partners to understand current realities and trends better and thus make better decisions? New technologies equip organizations to address ever-changing regulations, tax laws, internal control requirements, corporate governance, evolving reporting needs, and more, especially for global and complex businesses. Is your company facing any of these challenges? Does it have the right software to take them on?
Overall Strategy
When Campbell Soup Company, one of my former employers, decided to roll out SAP software across the company, the IT team created a chart showing nearly 100 applications and systems that would be replaced and streamlined. We dubbed it the “spaghetti chart.” Many SMEs likely have their own infamous spaghetti charts. Too often, companies make investments over time to address one need or another without an overall strategy or rationalizing existing systems. Ideally, small business CFOs are qualified to drive their organization’s overall philosophy and strategy regarding new technologies. When doing so, consider how much of the IT structure should be outsourced to a managed service provider (MSP) versus being internally managed. Likewise, define the organization’s appetite for implementing software “off-the-shelf” versus requiring customization to meet the (perceived) unique needs of the business.
Discipline
There are multiple ways CFOs can add discipline to the technology selection process. The CFO should drive cross-functional discussions regarding each initiative, verifying the purpose, need, strategic objective, and problem. Strive for consistency in project evaluations and push the team to identify alternatives, along with the pros and cons of each. Conduct a general assessment of risks and opportunities, including an analysis of the cost and impact of not moving forward. Research potential partners, including software providers, MSPs, consultants, and others, assessing their reputations, financial soundness, and track records. Lastly, drive the ongoing evaluation of these investments’ performance, course-correcting when appropriate.
Training
As alluded to above, effective user training is mission-critical, whether related to fully leveraging existing tools or implementing new, cutting-edge technologies. Once team members are trained, be sure they are leveraging new technologies and systems.
Steve McNally, CMA, CPA, is chair-elect of the Institute of Management Accountants and CFO of The PTI (Plastic Technologies Inc.) Group of Companies.
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