Published : 7 years ago, on 16/05/2018

• New research from Siemens Financial Services (SFS) identifies five key competencies required of the new breed of manufacturing CFO
• Entitled “CFO 4.0”, the report identifies the essential financial competencies that are required in the first stages of digital transformation to open up a wider range of affordable Industry 4.0 technology solutions
• A deep understanding of all available financing tools is critical for the CFO 4.0 to financially smooth the transition to Industry 4.0, and to make key competitive technology investments sustainable over time

Siemens Financial Services (SFS) has released a new research paper that describes ‘CFO 4.0’ – the new breed 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 digitalization opportunity vs digitalization 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 operationalize 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[i] from SFS has highlighted measurable improvements in manufacturing productivity – entitled the Digitalization Productivity Bonus – as an important evidential starting point for the digital transformation business case, typically delivering returns of between 6.3% and 9.8% of annual turnover. The core competencies of a CFO 4.0 are critical in achieving these returns. When applied to a selection of UK manufacturing sectors, the Digitalization 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 alleviate the manufacturer’s cash flow and working capital pressures. The paper explores these specialist 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 Brian Foster, Head of Industry Finance at Siemens Financial Services in the UK.“Using smart financing techniques, usually from specialist and expert financiers, 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 your marketplaces through digitalization and transition to Industry 4.0.”

Methodology

Over sixty manufacturers and expert management consultants were interviewed over the phone between October 2017 and February 2018. They were asked to identify the essential competencies which are needed by today’s manufacturing CFO in order to successfully enable digital transformation and transition to Industry 4.0. In addition, they were asked how a successful strategy is built, what skills are required and how it can be financed to produce the best return-on-investment.  Interviewees came from the following countries: China, France, Germany, India, Poland, Russia, Spain, Sweden, Turkey, the UK and the US.

[i] SFS, The Digitalization Productivity Bonus, April 2017