With the hype around AI and other technologies still buzzing, digital transformation remains a top priority for CFOs. But in order for companies to make real headway on their digital transformation initiatives, they need to put data governance and skills first, said Sharon Bhalaru, partner in consulting at accounting and consulting firm Armanino LLP who specializes in technology issues.

“The area where I would put a lot of focus on for our clients is around getting the data right,” she said in an interview. “The ability to use all the new features with AI are really going to be bottlenecked by bad data.”

If firms lack data governance or if their systems are cluttered — clogged with duplicate customers and addresses, for example — then the insights they gain from their predictive analytics are “not going to be very valuable,” she said. Going back to the basics and understanding one’s data structure is key, said Bhalaru.

“Do you know, what are your strategy and your firm goals, and are you connecting the dots back to your project goals and what you're trying to achieve with the digital transformation?” she said. “That's really going to be key in order to move to the next level, to be more forward looking.”

Digital transformation relies on data understanding 

CFOs take on a key role when it comes to driving their firms’ digital transformation goals forward — while chief technology officers or other executives can offer essential insights, ultimately, accountability goes back to the CFO because such initiatives are “a significant investment into their business,” Bhalaru said.

Having a complete understanding of one’s data governance strategy is therefore crucial for finance chiefs. Bhalaru pointed to the example of companies taking steps to become global entities, where companies may have to make choices where different sites may not have “what they’re used to in terms of their data and the structure of their data,” she said.

“Having that CFO, a decision maker at the executive level, who can make those decisions globally, will speed up the digital transformation journey,” she said.

Gaining a more holistic understanding of their data structure and brushing up on those skills can also help leaders be prepared when it comes to tapping new technologies. Exploring AI’s potential, for example, is becoming a must for companies — something that is especially true in the current economic environment.

Continued uncertainty means the “wait and see” approach leaders were taking in regards to digital transformation is no longer viable, according to Bhalaru. Companies that fail to upgrade their systems in time won’t be able to take proper advantage of emerging technologies like AI to ride out economic headwinds, she said.

AI can be pared with existing platforms, tying into one’s ERP system, for example. Companies can use ERP systems to aggregate key information into one place, and then tap emerging technologies like AI to better parse through that data and find the key insights needed to drive the business forward.

“What our executives and CFOs are looking to do is recognize the signal from the noise, and figure out, ‘what do I need to focus on?’” she said, with CFOs looking to find the right reports, dashboards or key performance indicators that will help them not only make the right decisions, be forward-looking in their business, empower their teams and retain skilled employees.

Data skills can aid talent retention

Putting an emphasis on data can also aid finance chiefs when it comes to talent retention, as upskilling one’s existing employees in these key areas can help both save companies funds and to allow them to push forward on their digital transformation initiatives.

“What we're also working [on] with a lot of our clients is helping to teach them to empower their workforce to learn new skills,” Bhalaru said.

While the most recent data from the Labor Department shows job growth may be slowing — the ratio of job openings fell to 9.9 million at the end of February, with the number of hires remaining relatively unchanged — cost optimization still remains high on CFOs’ priority list, with headcount and compensation emerging as two main spaces where financial leaders may look to reduce expenses.

Forty-two percent of financial leaders highlighted these two areas as a way to slash costs, according to a recent study by Grant Thornton, with the number of CFOs who are unsure they can meet their labor needs plummeting to an all-time low of 7%.

Upskilling existing employees not only means that businesses don’t have to hire new workers, but it can also help with employee retention, Bhalaru said, especially as workplace demographics continue to shift.

“More and more millennials and generation Z want to be able to learn and grow at a firm and if they're not getting that, they're happy to leave and go to another firm,” she said. “So by investing in their training, you're also getting stickier employees; a workforce that is willing to continue to invest in the business.”