New technologies promise huge increases in growth and efficiency. For CFOs, they need to balance stability and transformation.
Disruptive technologies are not only reshaping the business landscape, they are forcing CFOs to quickly evolve their strategies and embrace innovation. From different flavors of artificial intelligence (AI) to digital ledger technology (DLT) and cloud computing, these new tools offer huge potential for growth and efficiency but also present significant challenges.
As CFOs navigate this complex terrain, adapt their business operations, and decide how much financial commitment to make to them, they must understand the implications for their financial models, risk management practices, and overall business operations.
“Disruptive technology is accelerating transformation,” says Kyle McNab, vice president and director of research at Hackett Group. “It’s also the equalizer when it comes to transformation, and on the third hand, it’s an incredible disruptor for that as well.”
Many EY clients have tested these technologies and developed proofs of concept, often in finance, marketing and product development, says Deirdre Ryan, global finance transformation leader at EY.
“It’s critical that financial executives do their best and understand these capabilities,” she says. “They are the ones who greatly influence the allocation of capital, which is required to drive these programmes. They need to understand the capabilities and return on investment that will be provided.
Leading technologies such as artificial intelligence, machine learning, and generative artificial intelligence (genAI) promise improved financial forecasts, better data-driven insights, and greater efficiency through automation.
“Generative AI is fundamentally changing the approach to business transformation by driving innovation, improving efficiency and enabling entirely new business models,” says Monica Pruthi, global financial transformation leader at IBM Consulting.
This year alone, market intelligence firm IDC estimates that spending on AI could jump to $337 billion globally from $235 billion spent in 2024, or a nearly 50% increase year over year.
At the same time, distributed ledger technology increases the transparency of supply chains and adds another level of information security. Precedence Research estimates that the global economy spent $27 billion on DLT investments last year and forecasts a compound annual growth rate of 52.9% through 2034.
Cloud computing, the most mature revolutionary technology, has seen the largest amount of investment, with global spending expected to reach $723 billion in 2025, an increase of 21.5% over last year. IDC estimates that 90% of organizations will have hybrid cloud deployments — a combination of public cloud, private cloud, or on-premises infrastructure — by 2027.
“Cloud computing has a huge impact on organizations, especially the CFO, as it allows real-time access to financial data,” says Craig Stevenson, global head of technology, operations, data/AI and CISO at Korn Ferry. . “It improves the accuracy of reporting and reduces turnaround time on some of these reports and responsibilities for CFOs at public companies.”
Transformation management
Implementing disruptive technology that provides new business capabilities cannot be done effectively in a vacuum, but must involve a corresponding change in a company’s business model, says EY’s Ryan.
“We don’t always see that happen,” she says. “Transformation is not just about closing some software. It is about changing the mindset of people in the organization to embrace technologies and leverage the capabilities that technologies provide.
CFOs will have an opportunity to change mindsets as nearly two-thirds of CEOs say they need to rewrite the rules of the organizational game to remain competitive, according to a 2024 study of 2,000 CFOs across 26 industry sectors published by the IBM Business Institute. The study’s authors stress that these rewrites will require new skill sets, technologies, and operating models.
They also point out that CEOs expect their CFOs to balance stability and transformation while working closely with technology leaders to modernize their company’s technology infrastructure and create value.
Accordingly, CFOs are playing a more strategic role in technology adoption, often bringing the chief data officer and chief analytics officer, who typically have strong data science backgrounds, into their departments as direct reports while leaving the chief information officer (CIO) in charge. The role of disseminating new technology.
Organizations that implement business transformations effectively work toward a clearly defined business vision, Ryan says. Knowing the organization’s current process and what it wants to achieve is “an important part of this practical vision.” This is also the point at which conversations must begin about what technologies will enable transformation, which processes will be automated, and where human capital will be repositioned to create greater value.
According to McNabb, the best indicator of success is when an organization creates a formal transformation office or reshapes the expectations of executives and the board, moving away from the standard three-year plan.
“They set a set of goals for one year, and review everything every three months to see how things are going,” he says. “So far, companies that do so are better positioned to deal with this change.”
Embrace the journey
Successful implementation of a business transformation is not a one-time project. It requires a comprehensive conversation that includes processes, technology and operating models, promoting a vision of transformation as an ongoing process.
“What defines success today may look different tomorrow,” says IBM’s Pruthi. “Rather than being defined by a specific outcome, successful transformation is about an organization’s ability to evolve, learn and remain agile. Ultimately, it is up to business leaders to critically consider how to adapt their strategies to unleash sustainable growth and remain competitive in the Always changing.
Financial firms like JPMorgan Chase and Jane Street Capital are constantly reimagining themselves, notes McNab: “If you don’t embrace it, you’re just stuck.”
However, small businesses do not need to be on Fortune’s Global 2000 list to compete against larger companies. Small companies can move faster than some of their larger competitors, who typically have extensive investments in older technology.
“If small companies can get through this, they may find themselves in a position to leverage genetic AI to do something different and make the leap faster than a larger company can,” says McNab.
Moving target
One of the biggest challenges of implementing disruptive technologies as part of business transformation is their rapid evolution. Moore’s 60-year-old law states that the number of transistors in an integrated circuit doubles approximately every two years. AI has seen exponential growth even faster, with the computing resources needed to train AI models doubling every three to four months. The authors of a June research note from TechInsights estimate that “AI chips will account for 1.5% of electricity use over the next five years.”
With this rapid development, organizations will need to abandon the concept of “best practices,” with its established, proven, and widely adopted approaches, in favor of “good” or “emerging” practices, McNab predicts. He says good practices are those used by multiple organizations that achieve predictable, demonstrable results. In contrast, emerging practices are used by a small number of organizations that achieve exceptional results but may become obsolete within a year.
Likewise, organizations should expect that any business transformation will face a significant hurdle. A study of 1,646 people from across industry sectors by Saïd Business School, University of Oxford and EY describes these situations as “tipping points” that require leadership intervention to prevent a project from derailing. The researchers estimate that almost all transformation initiatives (96%) will experience such a crossroads event.
All of this means profound changes in business leaders’ expectations, agility, and risk tolerance. Successful interventions increased the success rate of transformation projects from 6% to 72%, improved implementation speed 80% of the time, and exceeded key performance indicators 31% of the time. On the other hand, unsuccessful interventions are 1.6 times more likely to lead to poor performance and 3.5 times more likely to degrade employee morale.
“The heart of successful transformation is about creating and maintaining an environment in which people can thrive, where they can experience, learn, take ownership of the work needed to achieve transformation, and ultimately feel satisfied with their efforts,” the Oxford/EY study authors conclude.
