CFO 4.0 – Essential Competencies for the Digital Transformation in Manufacturing
- New research from Siemens Financial Services (SFS) identifies five key competencies required of manufacturing CFOs
- 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:
- A comprehensive understanding of available financing options that can enable a commercially sustainable transition to Industry 4.0.
- 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.
- Specific Industry 4.0 knowledge and expertise – related to financial, technology, operations and market analyses – in order to accurately assess digitalization opportunity vs risk.
- The capability to build predictive Industry 4.0 business models, return-on-investment metrics and performance monitoring processes.
- 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 modeled.
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USA MANUFACTURING SECTOR
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DIGITALIZATION PRODUCTIVITY BONUS
($ billion)
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Food & Beverage
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42.8 – 66.5
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Chemicals
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36.9 – 57.4
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Printing Packaging & Paper
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11.6 – 18.0
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Pharmaceuticals
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10.2 – 19.7
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Automotive (passenger cars)
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16.1 – 25.0
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Plastics
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6.6 – 10.3
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Machine Building
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24.6 – 38.2
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Previous research from SFS (The Digitalization Productivity Bonus, April 2017) 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 USA 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 next-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 Gary Amos, Siemens Financial Services Commercial Finance CEO Americas. “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.
For further information, please see: www.siemens.com/cfo-4-0
For further information on the Financial Services Division, please see www.usa.siemens.com/finance
Contact:
Jillian Lukach, Director of Communication
+1 (732) 512-7550
Kristen Prazenica, Communication Specialist
+1 (732) 692-4487
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Siemens AG (Berlin and Munich) is a global technology powerhouse that has stood for engineering excellence, innovation, quality, reliability and internationality for 170 years. The company is active around the globe, focusing on the areas of electrification, automation and digitalization. One of the world’s largest producers of energy-efficient, resource-saving technologies, Siemens is a leading supplier of efficient power generation and power transmission solutions and a pioneer in infrastructure solutions as well as automation, drive and software solutions for industry. The company is also a leading provider of medical imaging equipment – such as computed tomography and magnetic resonance imaging systems – and a leader in laboratory diagnostics as well as clinical IT. In fiscal 2017, which ended on September 30, 2017, Siemens generated revenue of €83.0 billion and net income of €6.2 billion. At the end of September 2017, the company had around 377,000 employees worldwide. Further information is available on the Internet at www.siemens.com.