New research from Siemens Financial Services (SFS) identifies five key competencies required of the new genre of manufacturing CFO
Siemens Financial Services (SFS) has released a new research paper that describes ‘CFO 4.0’ – the genre of Chief Financial Officer in the manufacturing industry. The CFO 4.0 has a deep, holistic understanding of the competitive advantages of digital transformation, the competencies required to identify, evaluate and implement new business models for Industry 4.0, and the essential capability to drive and enable the transformation process.
Respondents to the SFS research identified five key competencies that the CFO 4.0 needs to exhibit, in order to enable successful digital transformation in manufacturing. They are:
1. A comprehensive understanding of available financing options that can enable a commercially sustainable transition to Industry 4.0
2. The ability to introduce relevant financing options at an early stage of the strategic Industry 4.0 process, in order to access and take advantage of the full range of potential solutions
3. Specific Industry 4.0 knowledge and expertise – related to financial, technology, operations and market analyses – in order to accurately assess digitalisation opportunity vs digitalisation risk
4. The capability to build predictive Industry 4.0 business models, return-on-investment metrics and performance monitoring processes
5. The proficiency to create an effective phased plan to operationalise the business’s move to Industry 4.0
Deployment of these competencies and capabilities allows each CFO 4.0 to enable tangible competitive and commercial gains for their company. Moreover, the commercial gains that the CFO 4.0 is enabling are considerable and can, to an extent, be reliably modelled.
Previous research from SFS has highlighted measurable improvements in manufacturing productivity – entitled the Digitalisation Productivity Bonus – as an important evidential starting point for the digital transformation business case, typically delivering returns of between 6.3 per cent and 9.8 per cent of annual turnover. The core competencies of a CFO 4.0 are critical in achieving these returns. When applied to a selection of Indian manufacturing sectors, the Digitalisation Productivity Bonus equates to the annual efficiencies listed in this table.
Specialist financiers have developed a set of financing tools – ‘Finance 4.0’ – that enable the transition to new-generation digital technology in a way that is affordable, sustainable and is designed to improve the manufacturer’s cash flow and ease working capital pressures. The paper explores these specialists financing methods, including pay-to-access/use equipment and technology finance, technology upgrade and update, software finance, pay for outcomes, transition finance and working capital solutions.
“The CFO 4.0 is now ensuring that financing options are considered right at the start of digital strategy development,” comments Sunil Kapoor, MD and CEO, Siemens Financial Services Pvt. Ltd. “Using smart financing techniques, from expert financiers – who combine their understanding of technology and finance, firms can often find that their range of affordable technology options widens considerably – and that can make the difference
in gaining significant competitive edge in the marketplace through digitalisation and transition to Industry 4.0.”