INTRODUCTION

70,000 years ago, a fascinating thing happened with humans. We developed an ability of shared imagination. We started to imagine, construct and believe in shared ideas like money, nature, language, etc. It started, what famous historian Yuval Noah Harari refers to as, the 'Cognitive Revolution' in his notable 2015 book Sapiens.1 This shared imagination was a powerful differentiation between humans and other species. For example, we cannot touch a language but still imagine and agree on the same meanings for words - no matter who speaks or writes them. This gave rise to intricate social structures, complex economies, and, most importantly, a well-defined collaboration within the human species.

Before this common pattern of imagination emerged, humans were mostly hunter-gatherers. We could use tools, find food and communicate in the most basic ways. The cognitive revolution was the first operating system upgrade of the human brain - and we never stopped after that. Though it took us another 60,000 years for the next major revolution to happen, i.e., the agricultural revolution (believed to be 10,000 BCE), it took us only 11,000 years (which is a blink of an eye in evolutionary terms) for the present Scientific Revolution2 to begin (~500 years ago).

In the past 500 years, we have come a long way. The cognitive revolution eventually led us to the inventions of general-purpose technologies like steam engines, electricity and computers. Every scientific advancement encouraged us to reimagine the previously untapped possibilities. We entered an era of 'creative destruction'3 where better technologies started to cannibalise the previous ones at a much faster rate than ever. Handwritten manuscripts were prevalent for over 2,000 years but then around 1436, the printing press was invented by a German goldsmith Johannes Gutenberg.4 It took a couple of centuries for the printed books to become widespread, making handwritten or other techniques obsolete. The earlier version of e-books was introduced in 1971, and it took only four decades for e-books to challenge the traditional paper format.5 By 2027, the global paper books market will encompass around 1.87 billion readers, while e-reader users are expected to reach 1.2 billion.6

Much like the invention of language as a collaborative imagination, objective advancements like the printing press, steam engine and electricity built a network that enabled large-scale human collaboration. This global interaction improved and solidified our shared thinking patterns. A scientific theory hypothesised in Europe would be reviewed and debated by scientists in the US. This critical evaluation of imagination is what enables human and scientific advancement. It is not our mere ability to communicate ideas - it is the power of reimagining those ideas that leads to scientific breakthroughs.

Today's technological landscape, fuelled by an abundance of cheap cloud computing power, scores of big data and artificial intelligence, is taking our shared imagination to another level. From novel drug discovery to reinventing entire industries, technology is fundamentally reshaping a critical collaborative paradigm of the modern world - the Corporations.

Technology is changing how businesses capture, create and deliver value.7 At its core, organisations must reimagine themselves in a new reality where traditional operating models become obsolete, innovative business models become a reality, and competitive landscapes shift. Uber, owing to its digital core and power of network effect, competes with mainstream taxi businesses, rental cars, food delivery and courier services at the same time. On the other hand, Samsung competes with Apple in the smartphone space but reportedly partners with them in providing OLED panels for iPhones.8

When we zoom in on the organisations, no process or function is impervious to these dynamics. Corporate finance is one function in the middle of this reimagined business landscape. Due to its central nature, finance has a unique vantage point from where it has visibility into enterprise-wide processes and data flow. It is one of the earliest adopters and enterprise leaders for technology in the form of financial management and Enterprise Resource Planning (ERP) systems. As presumed 'data stewards', finance functions have strategic, operational and financial insights into the business. All of this while maintaining governance, ensuring compliance and managing risks.

For Chief Financial Officers (CFOs), this creates a unique position at the C-suite table. They are no longer just involved in financial planning and performance reporting. They are responsible for strategic planning, driving pricing strategies and influencing cost optimisation decisions. This allows them to be the strategic co-pilot of the business. However, to do that, the existing finance operating models - littered with years of complexity, disparate systems, and multiple spreadsheets - need an overhaul. To that effect, leading digital transformation in finance function is no longer a choice.

CFOs realise that through automation, they can address the current inefficiencies and create bandwidth for existing finance teams to be a true business partner and a growth driver. Several CFO surveys indicate the increasing investment in technology as one of their top priorities.9 However, investing in technology is not enough. Successful digital transformation requires a clear strategy, correct orchestration of resources and a culture built around embracing change.

Unfortunately, that is where the hype-induced excitement fizzles out. Most transformation efforts are either failing altogether or falling short of their objectives. According to some studies, the failure rate of digital transformation is around 70%,10 and for AI initiatives, this rate goes up to 80%.11 On the other hand, according to International Data Corporation, global spending on digital transformation is expected to reach $4 trillion by 2027.12 I will leave it to your imagination how much of this investment can go to waste and how much can create real value for businesses.

WHAT IS THIS BOOK ABOUT?

The future of finance functions is about collaboration - a collaboration between humans and machines. This book attempts to equip you with the strategies, action plan and, most importantly, a mindset to reimagine this collaboration. I am not a futurist, nor is this book about predictions on how technology will evolve. Articles, blog posts and podcasts are filled with this information and opinions. I have purposely stayed away from buzzwords and general views. The intent is to provide a practical guide for CFOs or finance leaders not just to lead digital transformation in finance but also to co-create and influence the broader business digital strategy. Throughout the book, several successful (and not-so-successful) case studies support this position.

This work results from years of research on some of the great work done previously in the field, conducting interviews with various finance and business leaders and sharing my experience in this space. On several occasions, you will find me daring to digress from core finance into broader digital transformation case studies. The reason for that is digital transformation is inherently not a function-driven approach. You can have function-specific targets and initiatives, but all must fit into the bigger picture. So, understanding broader digital initiatives, how they relate to finance, and what we can learn from those examples is core to this book.

We often regard digital transformation as a domain for digital-native organisations like Amazon, Google and LinkedIn. Similarly, for traditional firms, it is seen as something exclusive to global multinationals with tremendous resources at their disposal. In this book, I will bust these myths. Firstly, we will purposely steer away from digital natives - unless it is something traditional firms can learn a great deal from. Secondly, I will draw on several transformation initiatives from traditional organisations of different sizes operating in banking, manufacturing, services and so on. Thirdly, we will see why resources and funding are neither enough nor a guarantee for the success of digital transformation. By the end of this book, I hope you will appreciate that digital transformation is an industry and size-agnostic undertaking.

In Chapter 1, I present the position of this book: why leading digital transformation is the new mandate for CFOs and its potential to make CFOs the strategic growth drivers of the organisation. We then move to Part 1: Navigating the Digital Landscape in Finance, which is all about building core digital capabilities and foundations for a successful digital transformation journey.

In Chapter 2, we will explore the computational capability needed to enable this endeavour, i.e., cloud computing. It will help us understand how cloud computing is not just reducing the cost of digitalisation but also how different cloud service models are playing a key role in enabling analytics-driven digital transformation.

Chapter 3 is then about the fuel of digital transformation - data. We will explore what needs to be done to build a strong data foundation and why CFOs are best placed to co-create the data strategy for the entire organisation and not just the finance function in isolation. We will evaluate real-world examples of successful data foundations in practice.

Chapter 4 explores another powerful...