Taking a CFO approach to digital transformation
Digital transformation was a top focus for companies in 2023, especially following the launch of OpenAI’s ChatGPT generative artificial intelligence tool — which sparked a flurry of investment among businesses looking to capitalize quickly on the new technology’s potential.
However, it’s critical for companies not to fall into the trap of investing in technology simply for the sake of it — rather, companies should be approaching digital transformation and technology integrations with a CFO mindset, said Raphael Ouzan, founder and CEO of engineering and technology talent platform A.Team. That means creating an outcome-focused digital transformation strategy, rather than assessing company-wide implementations that can often fall short of their lofty goals.
“When you think about product engineering… you think outcome first,” Ouzan said in an interview. “And outcome, that's the ROI language of the CFO.”
Taking the CFO approach
Companies have continued to place digital transformation high on their priority lists, but many digital transformation initiatives are driven by a need to respond to hype rather than a clear business strategy — a pitfall contributing to the failure of over half of these initiatives, according to a September 2023 study by KPMG.
The GenAI spending spree exemplifies the challenge faced by many companies, which need to keep pace with emerging technologies, but also need to ensure they are driving efficiencies as they come out of an uncertain economic environment.
“On one hand, you have to get to ROI very quickly, you need to increase margin in an inflationary environment,” Ouzan said. “On the other end, there's an acceleration of the pace of technology that we've never experienced in our lifetime.”
Applying a CFO point of view throughout a company’s digital transformation strategy can help achieve that balance, said Ouzan, who founded the New York-based A.Team in 2020. Taking an outcome-focused approach where companies can zero in on individual teams — bringing in skilled experts as needed — can potentially provide greater benefits, “so instead of doing those massive projects, you could do some things that are much smaller and get to much more transformation, much faster,” Ouzan said.
“When we come in, we come in basically with the CFO mindset of, what are the biggest problems right now,” he said. “And we have this approach which is basically, you don't jump to product innovation. You start with efficiency, because that is the first most immediate value proposition and business case for AI.”
Keeping the focus on efficiency
CFOs themselves also play a crucial role in helping their organizations respond to these types of challenges, “because ultimately CFOs know better than most how to value and how to put a premium on optionality,” Ouzan said.
However, many CFOs are working with budgets that are likely to remain flat or potentially decline given economic uncertainty, making it key to keep an even closer eye on the organization’s cost centers and where they will be spending to innovate. The key issue for CFOs tasked with balancing efficiency and innovation in this type of environment will be to learn what Ouzan called “iterative agility;” being able to swiftly experiment with new technologies in a way that creates value.
“It's important to realize that there's a discovery element to this, that you cannot foresee all future revenue and risk of a particular technology project or product capability building until you actually do it and iterate on it,” he said.