Frankfurt School Blockchain Center www.fs-blockchain.de contact@fs-blockchain.de

Follow us www.twitter.com/fsblockchain www.facebook.de/fsblockchain

Frankfurt School of Finance & Management gGmbH Adickesallee 32-34 60322 Frankfurt am Main Germany

1

MARCH 2020

FSBC Working Paper

The Role of the CFO of an Industrial Company: An Analysis of the Impact of Blockchain Technology Anna Caroline Lange, Philipp Marcello Schulden, Philipp Sandner

This explorative paper investigates the impact of blockchain tech-nology and its convergences on the role of the chief financial of-ficer (CFO) in the future. On the basis of a qualitative approach, including expert interviews and the consideration of recent block-chain-based and IoT-enabled use cases within the machine econ-omy, the impact of this emerging technology on the financial cor-porate function is determined.

Contemporary CFO-function of an Industrial Company

A Chief Financial Officer (CFO) is the senior executive primarily responsible for the management of the financial system of a firm (Mian, 2001). Originat-ing in the English-speaking world, this term was introduced in the USA in 1990 by the so-called Federal Chief Financial Officers Act (Jones & McCaffery, 1993). By definition. the CFO incorporates the most important

2

corporate function other than the Chief Executive Officer (CEO), actively de-termining and executing the strategic orientation of a corporation (Datta & Iskandar-Datta, 2014; Hoitash, Hoitash, & Kurt, 2016; Martínez Franco, Feeney, Quinn, & Hiebl, 2017), which frequently goes beyond the mere ac-counting and financial reporting tasks. Instead he supports the Chief Opera-tions Officer (COO) in strategic and tactical issues concerning financial mat-ters and acts as a business partner towards the CEO (Caglio, Dossi, & Van der Stede, 2018; Zorn, 2004). Some of the contemporary literature provides prac-tical summaries and categorizations of the CFO role, which is outlined in Ta-ble 1.

Table 1

Practical summaries and categorizations of the CFO role

Author(s)/year Role of the CFO

(Datta & Iskandar-Datta, 2014) - Crafting and executing corporate strategy - Expert in the accounting and financial area - Ensuring compliance with accounting stand-

ards - Crafting financing and investment strategies - Industry-consolidation via mergers and ac-

quisition - Dealings with the financial markets

(Hoitash et al., 2016) - Financial stewards of their companies - Managing internal controls and ensuring

compliance with accounting regulations - Oversee budgeting and influence corporate

spending - Gathering of required data - Participation in capital budgeting, corporate

financing, operational budgeting, and cash management

(Martínez Franco et al., 2017) - Actively leading the strategic course of the firm alongside the CEO

- Exert decisive influence on accounting func-tions of their firm

- Act as strategist and oversee enterprise risk management functions

(Mian, 2001) - Retains the ultimate responsibility for policy decisions regarding financial performance

- Oversees preparation of financial reports Serves as point person for external commu-nication of financial strategy

3

- Ultimate responsibility for raising capital de-velopment and execution of corporate strat-egy

(Caglio et al., 2018) - Second command to the CEO - Involved in major business decisions - Gatekeepers and watchdogs of financial in-

formation accuracy

Implications of Digitization on the Role of the Chief Financial Officer

Besides all legislative and economical changes, the digitization has a major impact on the role of the CFO. According to a study from Ernst & Young, about 70% see the traditional finance function undergoing a major change because of various reasons like automation, shared service centers and im-portantly due to emerging technologies (Bollman, Building, Gibbins, & Kay, 2016). In the following paragraphs the most crucial emerging technologies will be stated and their implications on the work of a chief financial officer will be outlined in detail.

Controlling & Data Governance. Effective data management is a fundamen-tal prerequisite for prognostic data analysis (Kirchberg & Müller, 2016) and is thus the foundation for the CFO’s controlling function. In this context, the concept of Big Data should be mentioned in particular. Gartner (2012, para. 1) defines Big Data as “high-volume, high-velocity and/or high-variety infor-mation assets, which demand cost-effective, innovative forms of information processing, and, in turn, enable enhanced insight, decision making, and pro-cess automation.” The rapid development of Big Data and the resulting expo-nential increase in data volume was mainly driven by social networks, the ma-chine to machine (M2M) communication, as well as the IoT (Paryasto, Alamsyah, Rahardjo, & Kuspriyanto, 2014a).

Data Quality Management. A data management system must be set up to plan, control and monitor the quality of the data over the entire lifecycle (Kirchberg & Müller, 2016). Otto & Weber (2018) describe data quality

4

management as quality-oriented management of data including processing, storage, maintenance and representation of data. Through the exponentially increasing amount of data, it will become increasingly important for the CFO to determine what data sources are used, what types of data are stored, where the data is stored, and how the data is applied and analyzed to ensure an ef-fective prognostic data analysis (Kirchberg & Müller, 2016; Otto & Weber, 2018).

Harmonization of IT-Landscapes. In addition to the quality management of data, the CFO is also responsible for harmonizing the often historically grown IT landscape and isolated solutions for individual company divisions within a firm. This ensures not only the standardization of data processing, but also enables cross-company access to data via a uniform system, which, in turn, prevents data silos (Keimer & Egle, 2018; Maroufi, Abdolee, & Tazekand, 2019). Moreover, harmonizing the IT landscape of a company ensures effec-tive controlling and reduces the complexity of implementing cross-company digital technologies in the future (Freitag, 2016; Keimer & Egle, 2018).

IT Security Risk Management. Donaldson, Siegel, Williams, & Aslam (2018) describe cyber security as an increasingly critical management issue. Partic-ularly, the high complexity of Big Data, including data security and govern-ance, is creating new challenges for organizations (Lafuente, 2015; Paryasto et al., 2014a; Tankard, 2012).

Paryasto et al. (2014) primarily detect the following security risks. First, the often-centralized nature of big data storage provides an attack surface for un-authorized parties to steal or alter sensitive data. Secondly, insufficient input validation and data filtering poses the risk of accepting incorrect or corrupted data, which can potentially lead to a system failure and financial losses due to insufficient authentication. Thirdly, the architectural design of Big Data sys-tems neglects the possibility for granular access control, which poses the risk of unintentionally granting access to confidential data to third parties. In ad-dition to security risk, the literature also identifies the risk of handling big data in terms of privacy. Such a privacy risk often arises from unclear owner-ship of data, in particular personal data, such as medical records. If these data

5

are then used, which in the following complicates the authorization of the data owner, there is a risk of penalties for those who process the data unlaw-fully (Raguseo, 2018). Especially in such scenarios, the CFO is required to support the mitigation of such risks through appropriate data governance in order to comply with legal requirements and ethical guidelines.

Advanced Data Analytics. About 2.5 quintillion bytes of data are created every single day, whereby 90 percent of today’s data was generated over the past two years only (Marr, 2018). By 2025 the global datasphere will reach about 175 zettabytes (Statista, 2017). It is thus inevitably to take a closer look at the impact big data and data analytics have on the CFO function. Big data, as defined by Gartner, is a „high-volume, high-velocity and/or high-variety information assets that demand cost-effective, innovative forms of infor-mation processing that enable enhanced insight, decision making, and pro-cess automation.” (2012, para 1). Fast development and exponential growth of big data, particularly driven by the Internet of Things (IoT), machine-to-machine-communication (M2M) and social networks (Paryasto, Alamsyah, Rahardjo, & Kuspriyanto, 2014b), forces CFOs to utilize real-time data ana-lytics tools for the analysis of the collected data (Gandomi & Haider, 2015). By using advanced tools and techniques, data analytics examines autono-mously content as well as data to reveal better insights, generate recommen-dations and to make predictions (Gartner, 2019). Moreover, digital analytics enable the acquisition of intelligence from big data, and thus CFOs can attain efficiency improvement and enhance their decision quality (Bollman et al., 2016; Ghasemaghaei, 2019); however, CFOs must use data analytics exten-sively to gain a better source of knowledge sharing and to shape their corpo-ration towards an insight-driven enterprise.

Cross-Company Business Processes. Due to the sheer data growth across the entire corporate structure, companies are increasingly no longer seen as a composition of individual departments, but rather as a single holistic organ-ization. Specifically, this means that data silos are opened, and data can be exchanged among the individual departments (Jarrar, Al-Mudimigh, & Zairi, 2000). In this context, Business Process Management (BPM) is becoming in-creasingly important. Dumas, La Rosa, Mendling, & Reijers (2013, p. 1)

6

describe BPM as a method to “[…] manage entire chains of events, activities and decisions that ultimately produce added value for an organization and its customers”. To comply with that circumstance, companies use Enterprise Re-source Planning (ERP) systems to integrate the complete range of business processes within the organization to get a holistic view of the business from a single IT architecture (Jarrar et al., 2000). In 2017, around 82 percent of large companies (with more than 250 employees) in Germany used an ERP soft-ware (Statistisches Bundesamt, 2017). This indicates that the digitization of internal company processes is already on a high level. Yet, inter-company processes are often difficult to implement due to a lack of compatibility be-tween ERP systems, as well as a lack of trust among the parties involved (Mendling et al., 2018). However, in the course of the increasing digitization and globalization, inter-company relationships, such as cross-company busi-ness processes, will gain central importance (Mendling et al., 2018). Ulti-mately, the interaction of IT and cross-company processes leads to new con-cepts, such as business integration and collaborative business (Scheer, Adam, & Erbach, 2005). However, this requires the development of solutions that harmonize the different business processes of different companies, ensuring a continuous compatibility throughout the entire lifecycle, from order entry to final payment.

Blockchain Technology

Blockchain technology was firstly introduced in 2008 in form of a white paper called “Bitcoin: A Peer-to-Peer Electronic Cash System” published by an anonymous individual or group known as Satoshi Nakamoto (Nakamoto, 2008). Thus, the cryptocurrency Bitcoin constitutes the first application of blockchain technology.

Andoni et al. (2019) describe a blockchain as a digital data structure, that is a shared and distributed database containing a continuously expanding log of transactions. The data is stored in decentralized and uniform ledgers that are distributed among all participants, also referred to as nodes, of a computer network. A blockchain is composed of a series of blocks linking every new block cryptographically to the previous one. These blocks contain a certain

7

quantity of records of transactions. Once a new block is verified, the ledger is updated and offers all participants a shared truth of records (Christidis & Devetsikiotis, 2016; Makhdoom, Abolhasan, Abbas, & Ni, 2019).

This results in a number of distinctive characteristics in regard to decentrali-zation, persistency, anonymity, and auditability (Wang, Zheng, Xie, Dai, & Chen, 2018). Blockchains, other than highly centralized systems, avoid a sin-gle point of failure due to the redundant storage of data in a distributed ledger across all participants of the network. In case a single network participant should drop out or be compromised, the identical data records remain avail-able at the other network participants, causing a high degree of persistency and transparency (Maroufi et al., 2019; Reyna, Martín, Chen, Soler, & Díaz, 2018). Thereby, it is nearly impossible for a single network participant to fal-sify or tamper data, as the comparison of the consistent data records being held by the other network participants would reveal a corruption of data (Dai & Vasarhelyi, 2017). As a result, a blockchain incorporates a high resilience to node compromise. The blockchain also eliminates the need for intervention of central authorities, which normally build participants’ trust in centralized systems (Wang et al., 2018). Each transaction performed on the blockchain is validated with the consensus of the network nodes. Therefore, a trust-free op-eration is possible without the necessity of a mediating party checking for compliance and accuracy of the operation. The requirement for consensus validation of the transactions and the provision of a time stamp on each trans-action render the individual transactions highly auditable (Fanning & Centers, 2016).

Even though the cryptocurrency Bitcoin remains the most popular applica-tion of this technology, the scope of application goes far beyond cryptographic currencies. Accordingly, Wang et al. (2018) see fields of applications in vari-ous financial services such as digital assets, remittance, and online payment. Thus, the latter authors see blockchain technology as an enabler for the next generation of internet interaction systems, such as smart contracts, public services, and IoT. Outlier Ventures (2016) consider the blockchain as a key technology to enable intelligent M2M networks that could potentially exert a considerable influence on traditional industries such as design and manufac-turing, distribution and logistics, as well as retail and commerce.

8

However, today's blockchain protocols still need to cope with a multitude of disadvantages compared to traditional centralized databases. Challenges in-clude the scalability, security, anonymity, and data privacy (Reyna et al., 2018). In particular, public blockchains such as Bitcoin or Ethereum suffer from a comparably low transaction throughput and high latencies for trans-action settlements, leading to limited scalability. The transaction throughput of the Bitcoin is currently maximized to 7 transactions per second. To put this into perspective, VISA's centralized transaction processing network can pro-cess an average of 2000 transactions within the same timeframe (Yli-Huumo, Ko, Choi, Park, & Smolander, 2016). Moreover, the purposefully designed en-ergy-intensive consensus mechanisms of e.g. the Bitcoin also limits the scala-bility, while further neglecting ecological sustainability (Truby, 2018). Yet, the scalability is a critical element as it is decisive for a wide-scale adaptation of a technology in the practical context (Sandner & Schulden, 2019). In addi-tion, the rise of quantum computing represents a considerable vulnerability to the security of current cryptographic architecture as it could undermine the security measures of digital signatures (Reyna et al., 2018). Moreover, in the context of anonymity and data privacy, the identification mechanism in pub-lic blockchains via the public/private key, which can be traced publicly on the blockchain, facilitates the traceability of a user's identity (Higgins & Sandner, 2019a). The challenges outlined above continue to prevent the blockchain technology from a widespread adoption, which is why further technological advancements of this new technology are required.

With respect to participating to consensus, there are two modes of operation: permissionless and permissioned. If participation is permissionless, anybody is allowed to participate in the network. This mode is true for Ethereum as a public blockchain. On the other hand, if participation is permissioned, partic-ipants are selected in advance and access to the network is restricted to these only. This is true for Fabric and Corda. The mode of participation, permis-sionless or permissioned, has a profound impact on how consensus is reached.

Blockchain-based Machine-to-Machine (M2M) Economy. The advent of blockchain technology with its decentralized ledger technology, is considered to be a suitable backbone enabling a machine-to-machine (M2M) economy in

9

the future (Swan, 2015). M2M economy and M2M communication will thus be outlined further below.

In recent years, economy has experienced a shift from human economy, char-acterized by an interaction and interoperability between people and ma-chines, towards a machine economy. On a global scale, the per capita average number of devices and connections will rise from two in 2015 to more than 3 by 2020. Inter alia M2M connections will represent approximately 46 percent of total connected devices. Therefore, M2M is considered to grow faster than any other category (Cisco, 2019; Hung, 2017). By 2020, more than 75 billion IP-capable devices will be in place, stating the immense impact of M2M de-vices on society and the economy (Statista, 2019). Eichmann even considers “everything will be smart, autonomous and connected, economically inde-pendent and most likely managed by a new technical backbone — and not by old mainframes anymore” (2018, para 1). Machine-to-machine economy or M2M economy is defined as a communication network whereby machines, objects and sensors are connected with each other (Anton-Haro & Dohler, 2014; Swan, 2015). The concept of machine economy, however, originally emerged from basic fleet management solutions with the aim to improve spe-cific processes, for instance the monitoring of valuable shipments and data is most likely not shared beyond its silo. At this moment in time the inte-gration of stand-alone solutions into a broader business context was not taken into consideration (Anton-Haro & Dohler, 2014). Two markets exist for M2M economy, on the one hand the B2B market, which includes the industrial in-ternet and is considered the main market of M2M. On the other hand, ma-chine economy targets a B2C market, which entails internet of things (IoT) (Anton-Haro & Dohler, 2014). M2M economy has yet been driven by device-centric solutions, due to recent developments in technology, these solutions have now been replaced by sophisticated process-centric solutions whereby data streams are combined. Furthermore, emerging technologies including the Internet of things, which will be explained in further detail below, enables connected solutions. According to Haro & Dohler, “M2M will ultimately per-vade all aspects of […] lives including environments with which we interact, every aspect of economic […] activities that underpins our daily lives.” (2014, p. 350). Therefore M2M connected solutions will be integrated into various

10

fields of modern economy and society (Anton-Haro & Dohler, 2014), as shown in figure 1.

Figure 1

M2M Payments and machine economy

Prerequisites for the Adoption of the blockchain-based Ma-chine Economy in the Enterprise Sector

For a comprehend understanding of the impact of blockchain technology trig-gering an autonomous M2M economy, it is nevertheless important to clarify the terminology of smart contracts, the idea of cash-on-ledger as well as the core concept of Internet of things (IoT) in the chapter hereinafter.

11

Blockchain-based smart contracts. The concept of smart contracts have gained popularity with the emergence of Ethereum, a decentralized platform for running those contracts (Petersson, 2018).

Smart contracts are considered to be the ultimate progression of blockchain technology due to its code, which denotes software written in programming language (Sandner & Valenta, 2017). However, smart contracts need to be distinguished from conventional contracts, as they are neither artificial intel-ligence driven nor legally binding (Sandner & Valenta, 2017). Instead, smart contracts are small pieces of software, which are self-executing agreements without the need of a third-party intermediary. Furthermore, they decide au-tonomously whenever certain conditions are met using external information as input data (Schlatt, Schweizer, Urbach, & Fridgen, 2016). Human interac-tions are automated by executing, enforcing, verifying and inhibiting con-tracts through algorithms, according to Swanson (2014).

Smart Contract enabled Integrated Business Ecosystems. The scope of smart contracts is not limited to financial instruments, but also provides the potential for blockchain-based integrated ecosystems, such as mobility, logis-tics, energy, machinery, or Industry 4.0. The possibility of representing and programming entire lifecycles of a business process by deploying smart con-tracts allows for a new era of business collaboration. Thus, smart contracts enhance the inter-company interoperability, as the blockchain technology with its feature of build-in trust integrates and automates the entire process from order entry to final payment on an inter-company basis (Outlier Ventures, 2018).

Previously costly and incompatible intermediate stages of the business pro-cess, caused by incompatible ERP systems, data silos, different company pol-icies, and a lack of trust, are thus merged and harmonized over the entire lifecycle, and continuously monitored by the conditions of the smart contract. The resulting interoperability leads to an outward reorientation of compa-nies, enabling them to be part of a globally networked economy. Figure 2 il-lustrates the scenario of a smart contract-based automated business process lifecycle compared to a traditional business process lifecycle.

12

Notably, the outward orientation of companies offers opportunities in terms of new business models. Mobility-as-a-Service (MaaS) represents a good ex-emplification of a blockchain-based integrated ecosystem. The MaaS Alliance (2018, para. 1) defines MaaS as “the integration of various forms of transport services into a single mobility service accessible on demand”. Thus, previously independent mobility providers create a common and trustless ecosystem through the application of smart contracts without the need for a third party operating the system or facilitating trust among the participants. Through the representation of the vehicles as digital twins in form of smart contracts on a consortium blockchain, each mobility provider can pre-determine the condi-tions under which its vehicles can be used. Smart contracts also harmonize the different business processes of the mobility providers so that the business process can be automated from order entry to payment. Hence, customers can book different mobility offers via a uniform platform with a single digital identity, which is also stored on the blockchain (MaaS Alliance, 2018; Sümmermann, Öge, Smolenski, Fridgen, & Rieger, 2018).

Notably, Outlier Ventures (2018) recognize smart contracts as the future fa-cilitators for automating data in such ecosystems in order to create high levels of automation with auditable parameters, as shown in figure 2.

13

Figure 2

Blockchain-enabled Business Process Optimization (BPO)1

Traditional Currencies on the Ledger: Digital Euro. In addition to internal prerequisites favoring the adoption of the blockchain technology, there must be external prerequisites in place which the CFO cannot directly influence. For a broad adoption of the blockchain technology in the industrial environ-ment in Germany and Europe, the Euro on the blockchain will be a mandatory requirement. This becomes evident when one considers the payment proce-dure of today's industrial companies. An accounting and settlement of pay-ments in the form of classic cryptocurrencies, such as the Bitcoin, appears unlikely. These clearing units are not sufficiently regulated, they are exposed to high volatility and do not correspond to the accounting regime of most companies. In order to counter these problems, privately issued stable coins were introduced. Nevertheless, considerable risks can also be identified such as counterparty and default risks. For these reasons, a practical and wide-spread use of blockchain technology for payment vs. delivery in the industrial environment is not feasible. Therefore, a digital Euro on the blockchain be-comes a compulsory requirement for effective and harmonized integrated DLT ecosystems to facilitate a broad adoption by economic actors. This is a basic prerequisite for the success of the Machine Economy. If machines are integrated into payment transactions, the transfer of values must occur in a conventional and state-backed currency such as the Euro. According to the

14

opinion of the majority of the surveyed experts, this eliminates the need to adjust accounting standards, there would be no barriers to compliance, high volatility is avoided and there are no costly exchange procedures. Blockchain technology can also integrate machines and silos into automated business processes, such as leasing or factoring using smart contracts. For this pur-pose, the digital Euro represents an important prerequisite, either in the form of commercial money or of central bank money on ledger. Furthermore, with the Euro as a token on the blockchain, an integrated platform could be created on which all types of assets can be traded and mutually interchanged. Thus, valuables of all kinds (e.g. stocks, bonds, currencies, physical objects) would no longer transferred and reconciled between silo-like systems.

Identity on the Blockchain. Furtherly, identity on the blockchain is an im-portant prerequisite for the success of the Machine Economy in the industrial environment. To represent and enable the entire economic cycle and the as-sociated payment and goods traffic on a blockchain, each actor in this cycle needs to hold a digital identity to ensure legally compliant business transac-tions. In the Industry 4.0, these actors include humans, legal entities such as companies, as well as independently acting machines. Thus, by equipping each of these actors with a digital identity, for example, humans and compa-nies, humans and machines, or machines and machines can conduct transac-tions in an automized and efficient manner. The result is an interconnected and decentralized payment network. The blockchain enables the GDPR-com-pliant administration and storage of personal data, as well as the monetiza-tion of the self-generated data by the actors. By fulfilling these prerequisites, new, decentralized and integrated ecosystems can be created, which allow economic actors to collaborate in an automated and efficient environment.

Methods of the Investigation

This chapter outlines the method for analyzing the impact of blockchain tech-nology on the CFO-function of an industrial company. The prior theoretical foundation provides the foundation for the subsequent investigation. How-ever, due to the explorative character of this study and the limited data

15

available on this topic, further qualitative research in addition to existing lit-erature is required to ultimately answer the defined research questions.

Expert Interviews. The theoretical foundation of this study comprises a syn-thesis of existing research of secondary literature to provide a profound un-derstanding of the research topic. Due to the explorative nature of this re-search, a primary research method is to be used by a systematic and theoret-ical procedure of data collection in the form of interviews with people in pos-session of exclusive knowledge (Kaiser, 2014). The scientific results are gen-erated from the statements of the interview partners and analyzed on the ba-sis of theoretical concepts (Ahlrichs, 2012).

Selection of Interview Partners and Sampling. Experts are people who due their long-standing experience possess specific knowledge or skills. This sec-tor-specific knowledge was the fundamental criterion used when selecting ex-perts (Kurzrock, 2014). Specifically, in the case of this study, these were per-sons who, by exercising their professional role, were able to judge and evalu-ate the effects of blockchain technology on the finance function of an indus-trial company. The primary target groups were individuals from the fields of industry, consulting and academia. The sample size of this study is 23 (n=23). Due to the narrow study aim, a sample size of 11 participants provides suffi-cient information power. Firstly, this is due to a combination of participants that is highly specific for the study aim. Secondly, the results of the interviews are supportable by established theory (Malterud, Siersma, & Guassora, 2010).

Research Questions.

RQ1: To what extent might blockchain technology impact and redefine the traditional CFO role and revolutionize the finance function?

RQ2: How will blockchain technology and the possibility of machine-to-ma-chine payments leverage the CFO role and improve its company’s business model/ to fulfill a CFOs goals/metrics?

16

RQ3: What is the impact of blockchain technology in convergence with the Machine Economy on the KPIs of the CFO of an industrial company?

RQ4: What is the impact of blockchain-enabled integrated business ecosys-tems on the role of the CFO of an industrial company?

Impact of Blockchain Technology on the Traditional CFO Role and Finance Function

Since the late 1990’s the traditional role of the CFO has been under consider-able change, starting with the implementation of ERP systems up to advanced data analytics and the emergence of blockchain technology. Literature refers to a major alteration within the finance sector due to emerging technologies (Bollman et al., 2016). Supporting a survey from 2017, wherein roughly 80% of German corporations are using ERP software for enabling end-to-end pro-cess management and business process integration, expert 1 affirms the in-troduction of these systems already lead to improved operational insights and automation (Statistiken & Thema, 2019). Likewise, advanced data analytics, cloud services, RPA and AI enabled the CFO for more profound decision mak-ing based on real-time data following the theory (Gandomi & Haider, 2015). Expert 5 agrees and elaborates that these improvements, however, require a reorientation of the CFO towards a strategic sparring partner to the CEO. Even though literature refers to the automation of certain process workflows through RPA, improved data interpretation and real-time assessment via AI (Bollman et al., 2016; Horvath&Partners, 2016; Kokina & Davenport, 2017), expert 10 and 3 agree on the importance of data quality and necessity of using it as a competitive advantage. Both anticipate with expert 1 that blockchain technology exceeds the aforementioned technologies for instance by inter-linking and referencing the data into one place for a smoother process work-flow. Expert 1, furthermore, confirms that as blockchain technology might lead to a full automation of processes within auditing and accounting, tradi-tional tasks of a CFO be relieved to a certain extent. Thus, in the following, the impacts of this emerging technology on the CFO function will be discussed in detail.

17

Accounting. In view of digitization, CFOs are still seen as financial stewards. They are responsible for reporting and controlling, oversee the compliance of accounting regulations as well as ensuring that the audit process runs smoothly. Due to the emergence of blockchain technology with its consensus mechanism, a CFO and his department gain exceptional data insights and data transparency enabling to work in a more efficient manner. Especially within accounting processes, blockchain technology ensures that financial transactions are automatically verified in real-time, immutable and furtherly stored in an appropriate DLT system. Silo-like data structures can be broken down, as financial data is not only gathered and harmonized but encrypted, enabling a CFO to overcome current digitization hurdles. Besides, blockchain technology improves the management of data transparency and quality, as data is synchronized, processed and stored on a real-time basis. Payment pro-cesses can be conducted via wallets, containing real-time information about every payment process made via this account. These wallets conduct every transaction, billing and invoicing transparently and securely for the CFO.

New Business Models. As evidenced by the AZHOS use-case, blockchain technology allows for new business models and process optimization. En-hanced inter- and intracompany processes arise because of the possibility of harmonizing not only heterogenous IT systems, infrastructures and plat-forms but also data transition and accounting processes, which are executed via smart contracts. Smart contracts follow a defined business logic, allowing the CFO for time and cost savings. In addition, a CFO has implicitly to main-tain industry knowledge understanding the impact of blockchain technology not only from an analytical, strategic but also digital angle in order to derive an optimal benefit. For instance, the possibility of blockchain-based sensor technology as used by AZHOS, enables new business models within supply chain finance revolutionizing the entire finance sector. Turning this field of business upside down, blockchain technology facilitates automation of work-flow processes, optimizes and automates accounting and auditing practices as well as reduces costs, which is a crucial area of a CFOs responsibility (Caglio et al., 2018; Zorn, 2004). Expert 5, moreover, affirms the emergence of crypto-ledger accounting due to blockchain technology. This would require a CFO to understand not only the technology but furthermore all relevant ac-counting concepts in detail. As the current blockchain developments are not

18

yet entirely reflected in the accounting standards, a CFO needs to seek for a unique approach depending on individual situations.

Besides, literature and experts affirm blockchain technology, more accurately smart contracts, empower to rethink organizational structures with regards to business process management (Sandner & Valenta, 2017). Due to the fact that smart contracts enable an automation and thus reorganization of inter- and intra-organizational workflows, a CFO might consider engaging with ex-ternal consultants. They will be of value for change management and will sup-port the CFO in terms of rethinking organizational structures within and be-yond his division for a successful blockchain implementation.

Another aspect worth considering is the alleviation of IT security risks and improved data governance. The decentralized nature of blockchains prevents single point of failure, is considered very tamper-proof and thus a CFO can expect fewer hacker attacks.

Due to the proof of stake and proof of work of blockchain technology a CFO can ensure that his financial data is secured from manipulation and inappro-priate changes in his data base are detected (Houben & Snyers, 2018). Be-sides, a CFO can determine who receives admission to confidential financial data, as a consortium blockchain allows a CFO to create tailored reading rights to stakeholders including state authorities, banks, suppliers, etc. (Buterin 2015).

Financial Reporting. A CFO can create precise analyses for financial control-ling and reporting while operating on one data basis. Optimized data trans-parency and operational insights can be used by a CFO for reducing the inter-pretation space of financial data, instead he can rely on a trusted, credible and tamper-proof data base resulting in document security (Higgins & Sandner, 2019b; Reyna et al., 2018). Blockchain technology will enhance not only data transparency but a CFO can share financial documents within his network. For instance, his division, granting access to transactions as well as digital data can be exchanged on a faster scale resulting in improved operational in-sights and more targeted working.

19

A CFO will profit from an enhanced decision-making processes, as blockchain technology enables very precise financial forecasts, which are based on his-torical data derived externally and internally. Further, as a strategic partner to the CEO, a CFO can report the current financial status necessary for an appropriate corporate strategy as well as to increase company value.

Financial Auditing. Within the audit process blockchain plays a pivotal role according to literature (Higgins & Sandner, 2019b; Reyna et al., 2018). The immutability of transactions prevents the modification of stored data. Block-chain acts as a source of verification with regards to reported transactions. Auditors can execute their work without asking a CFO for bank statements. Instead transactions are verified on the blockchain, whereby anomalies are easily identified resulting in cost efficiencies as well as the level of assurances is increased mitigating the risk of fraud. Consequently, a CFOs liability risk shrinks to a minimum.

Skill Set. Apart from revolutionizing the finance function and a CFOs work, blockchain technology will have a far-reaching impact on the needed skill set and competencies of a CFO. Therefore, in the following, necessary prerequi-sites of a CFO will be discussed in detail.

Prospectively a CFO will be confronted with a different set of competences, including hard, social and soft skills. Experts share the same view as gained from theory, for example contemporary literature states a CFO functions be-yond a financial steward supporting a COO and CEO in strategic and tactical

matters (Caglio et al., 2018; Zorn, 2004); and is thus congruent with the opinion

of expert 4 that a CFO will shift towards a generalist. Due to the fact, that blockchain technology is designed as an algorithm and regarded as a protocol for distributed ledger technology allowing for validated but cryptographically ensured transactions (Andoni et al., 2019; Halpin & Piekarska, 2017; Hileman & Rauchs, 2017), experts 1 and 3 as well as literature anticipate the inevitabil-ity of developing a sound understanding not only for blockchain technology but acquiring superficial programming skills and IT expertise. However, due to the complexity of this technology a CFOs function might be impacted to the extent that he has to consider trainings for himself and his department as well

20

as to hire new employees, for instance IT and computer specialists supporting him.

Within the financial sector blockchain technology especially paves the way for inventive solutions following literature and experts 5, 7 and 10 (Molla & Bhalla, 2006); therefore the ability of open-mindedness, pro-activity and support is indispensable for a future CFO. Moreover, for a CFO to prevent lagging behind other companies, as mentioned by expert 3, and to accomplish the aforementioned points, a CFO is obliged creating the necessary budget and commit blockchain-based to projects.

Above the technical proficiency, blockchain technology compels a CFO to bear improved social and soft competencies with regards to his employees, as lit-erature refers to blockchain technology as a transformer and disrupter of the financial sector and thus the work of employees working in such a division (Bollman et al., 2016). Consequently, expert 4 also affirms a CFO needs, be-sides a throughout understanding of the impact of this technology on his em-ployees, the ability to motivate and incentivize them. The capability of con-veying employees to adapt to innovations like blockchain is thus vital soft skill for a CFO. Communicating trust in this new technology, support further de-velopment of employees as well as to build a trustworthy relationship with his division are further aspects. Stating only an interplay of emerging technolo-gies and soft skills will lead a company to success, literature underpins the aforementioned statements (Bollman et al., 2016; Kirchberg & Müller, 2016).

Impact of Blockchain Technology in Convergence with the Machine Economy on the KPIs of the CFO of an Industrial Company

By 2025, the total installed base of IoT devices is estimated to equal 75 billion (IHS, 2016). While a large proportion of this quantity will certainly represent household devices, this will also refer to industrial components within the In-dustry 4.0, such as interconnected machinery or sensor-equipped warehous-ing as silos. In this respect, according to the expert interviews and the litera-ture, the blockchain serves as a key technology to facilitate the complete

21

integration of data flow of all functions involved in the economic process of the future industrial period. The conducted expert interviews have shown a significant influence of blockchain in convergence with the Machine Economy on the KPIs of the CFO of an industrial company. These include a reduction of operational expenditures, an improvement of the CFO’s working capital management, an enhancement in treasury and cash management as well as an improvement of capital provision.

Reduction of Operational Expenditures. As previously discussed, the blockchain offers a variety of cost-efficiencies regarding internal and inter-organizational accounting, reporting, auditing, as well as the high potential of business process automation through smart contracts and emerging technol-ogies. These advantages also materialize in the context of the Industry 4.0, with the incorporation of both machine and sensor data recorded on the blockchain. Following the executed expert interviews, this enables the subse-quent cost-cutting measures regarding operational expenditures.

With reference to Expert 15, the installation of sensors into e.g. chemical silos enables real-time insight into the associated filling level. Here, for instance, the silo operator as well as the customer run a separate blockchain node to sign and verify the metered telemetry data. On the one hand, this allows for a highly accurate and ongoing stocktaking of the silo content. This simplifies the otherwise regular, cost- and time-intensive inventory process and pro-vides insight into consumption data, which offers blockchain-enabled full in-tegrity and transparency with fully automated replenishment of raw materi-als. On the other hand, this enables highly accurate forecasts of expected con-sumption which prevents excess production. Resulting the high degree of transparency and trust among the operator and customer, a silo can be em-bedded into the payment transaction processing by additionally using the blockchain as a payment layer. Consequently, if a customer consumes chem-icals out of the operator’s silo, the silo itself automatically and directly exe-cutes the invoicing and audits the incoming payments. Thus, instead of the silo operator's accounting department, the silo itself sends the invoice and checks incoming payments based on the underlying smart contract predefin-ing the order lifecycle. This also eliminates the need for invoice verification and payment instruction on the part of the customer. According to Expert 15,

22

machines therefore have the potential to become independent economic ac-tors referred to as “profit centers”. In this scenario, machines are equipped with their own digital wallets, which make it possible for the machines to send and receive funds. This happens without requiring an additional intermediary for the transaction processing, such as a human-operated accounting depart-ment. This process considerably reduces administrative expenditures per transaction by the facilitated machine-to-machine payments and prospec-tively enables a decentral governance of organizations.

Improvement of Working Capital Management. Blockchain technology fa-cilitates full transparency and integrity of sensors’ telemetry data measuring a company’s assets. According to the surveyed experts, this considerably im-proves the working capital management of a CFO. First, blockchain-enabled predictive advanced data analytics supports the CFO in minimizing the ware-house stock. Consequently, the tied-up capital declines and therefore working capital is reduced, which in turn increases the company’s liquidity.

Secondly, in addition to minimizing the warehouse stock, the blockchain en-ables the CFO to capitalize a company’s assets on the balance sheet. If, for instance, the silo is situated at the customer’s plant, it is currently rather com-plex to gain real-time and verified insight into the filling level of the silo. How-ever, if this measurement data is now transmitted in a fully transparent and verified manner, the CFO can capitalize the available assets on the balance sheet at any time. Consequently, previously hidden reserves are disclosed which positively impacts the assets side and therefore the working capital.

The integration of machines into payment transactions also exerts positive influence on a CFO’s working capital ratio. The utilization of blockchain-ena-bled autonomous M2M payments shorten the supplier’s DSOs as payments are instantly settled. This, in turn, positively impacts the cash-to-cash cycle time and liquidity, while ultimately lowering the working capital associated with the increase in transaction speed.

23

Improvement of Treasury and Cash Management. The strategic financial management of a CFO comprises the overall cash management (e.g. Hoitash et al., 2016), while heading the treasury department of a company (e.g. Hommel et al., 2012). Again, the interviews conducted revealed a substantial influence on the CFO's key performance indicators in the realms of cash man-agement and treasury.

The blockchain-enabled automated M2M payments provide the ability to in-tegrate machines into payment networks. Notably, the blockchain technology also facilitates the representation of traditional currencies as units of account. According to the experts, the representation of e.g. the Euro on the blockchain permits to associate the currency with functions by then being programma-ble. Hence, not only the programming of simple payment logics is conceiva-ble, but also the depiction of predefined and already existing entire business logics. In the industrial environment, leasing contracts, factoring processes or interest payments would be plausible.

Accordingly, a possible application would be a revolutionary form of leasing of machinery and production equipment. As previously discussed, the block-chain technology creates a high degree of transparency and integrity associ-ated with machine sensor data. As a result, this data could be used by the les-sor to provide the lessee with a usage-based and flexible leasing rate. In ac-cordance with the profit center logic, the lessee does not represent a specific company, but the machine itself, which also full automatically pays the lease payments and keeps accounts.

Similarly, a machine could conclude factoring contracts and decide for itself when an inflow of money should occur. In order to make this possible, a blockchain-based capital market that runs in the background would ensure the sufficient provision and funding of the factoring. Up until now, economi-cally feasible asset-backed security transactions can only be carried out if the securitization is based on a sufficient volume of receivables. In contrast, due to its high degree of automation and transparency, the blockchain could pro-spectively securitize even relatively small receivables without the need for an intermediary.

24

The CFO can also use machine data to more accurately determine financing needs to prevent over- or under-funding of dept capital.

Improvement of Capital Provision & Reduction of Capital Costs. The CFO, in his role of managing the financing portfolio of a company, is provided with a new instrument for corporate financing by the possibility of block-chain-based tokenization of assets to be traded on capital markets. By captur-ing telemetric data and the simultaneous verification by the parties involved, potential investors gain the data security they demand to invest in previously illiquid assets - in a highly granular manner. This allows not only the securit-ization of accounts receivable, as in the case of factoring, but also the securit-ization of entire production facilities and their individual components. Con-sequently, by displaying and tokenizing individual machines or silos as digital twins on the blockchain, an unchangeable and complete audit trail is gener-ated that records the utilization of an industrial component and allows the subsequent investor’s rate of return to be calculated. This complements the aforementioned profit center logic. Therefore, in the environment of the In-dustry 4.0, the securitized machine or silo do not only autonomously perform management in regard to accounting, reporting and auditing but also inde-pendently control the own capital provision by facilitating availability on the capital markets.

So far, the securitization of such granular commodities has not been econom-ically viable due to the high costs associated with legal structuring or auditing. The legal reorientation of legislation that can now be observed, for example in Liechtenstein, renders it possible to set up and issue singular capital goods in an economically sensible manner. Also, high administration costs will be largely omitted, which will make high audit costs obsolete. Thus, companies can automate the issuance, sale and the administration of granular capital assets.

In line with the conducted interviews, the CFOs of industrial companies and SMEs are able to significantly reduce debt capital costs, ensure faster and cheaper on-demand refinancing and significantly increase the underlying in-vestor base. In the long run, the dependence of industrial companies on a

25

small number of banks will thus be reduced. In the future, it will be private or institutional investors who ensure sufficient financing, together with other industrial companies that finance each other. In this way, capital goods can be off-balanced in order to contract the company’s balance sheet.

Impact of blockchain-enabled Integrated Business Ecosys-tems on the Role of the CFO

The blockchain-enabled data integrity facilitates new forms of inter-organi-zational and inter-industry collaboration, serving as a backbone for applica-tions in the fields of e.g. Industry 4.0, Mobility and Energy. Previously costly and incompatible intermediate stages of the business process, caused by in-compatible ERP systems, data silos, different company policies, and a lack of trust, are thus merged and harmonized over the entire business process lifecycle and are monitored by the conditions of a smart contract. Hence, the blockchain’s characteristics of transparency, immutability and cryptography are the cornerstones for the emergence of inter-company and inter-industry collaboration. This creates a high level of trust among participants of inte-grated ecosystems, permitting a high degree of automation with auditable pa-rameters and simultaneously reducing the need for human intervention to a minimum. For a CFO of an industrial company operating under the influence of the Machine Economy, these benefits are of great importance, in order to enable all the different actors such as humans, companies and machines to network and transact with each other on an inter-company basis. The result-ing interoperability leads to an outward reorientation of the CFO’s company, enabling organizations to be part of a globally networked economy, poten-tially leading to an economic paradigm shift. The outward-looking orientation of the company allows for a reciprocal exchange of data, which will result in a highly collaborative and diverse ecosystem.

Yet, in such ecosystems, the blockchain can only develop its potential and cre-ate added value in convergence with other emerging technologies. Such eco-systems receive data recorded by the Internet of Things, this data is then ad-ministered and verified by the blockchain to consequently being automated by artificial intelligence (Outlier Ventures, 2018). In particular, the experts

26

surveyed see the potential of integrated ecosystems particularly for compa-nies with a large machine base permitting connectivity to the internet, for businesses with high-volume and industry-relevant data production, and for corporations maintaining recurring and intensive supply relationships amongst each other. In the first case, using such a blockchain-based inte-grated ecosystem, companies can integrate their machines into a payment network, achieve a high degree of automation and at the same time make the machines accessible to the external market, for instance to increase the ma-chine utilization and to consequently reduce idle times. Additionally, the CFO can leverage the blockchain and emerging ecosystems to exchange valuable and industry-relevant data with other ecosystem participants to subsequently monetize it. For example, vehicle data on the blockchain is already being ex-changed between several car manufacturers in an ecosystem with the aim of improving the performance of vehicles. Moreover, applying blockchain tech-nology eliminates barriers that previously hindered the secure and transpar-ent exchange of this data. All participants, including the drivers, retain full control over their data and can decide which data they want to pass on and which not. Additionally, companies with large and multi-dimensional supply relationships can use such ecosystems to automate and streamline the entire order lifecycle. Thus, participating in an integrated ecosystem potentially re-sults in cost reductions with regard to cost-efficiencies through the automa-tion of business processes, a decrease in administrative expenditures, as well as a reduction in labor costs. In addition, integrated business ecosystems pro-vide an opportunity for new business models and therefore new profit pools for the CFO and his organization.

However, as with the KPIs of the CFO, certain preconditions must be met in order to capitalize on the aforementioned business opportunities. Firstly, due to the still relatively nascent development stage of the blockchain technology, a variety of different platforms and non-interoperable systems have emerged. Due to insufficient interoperability of different blockchains, an efficient and productive cooperation of various actors is frequently hampered. The top management of firms should therefore involve industry stakeholders in order to agree upon common standards and requirements to foster collaboration. Consequently, and secondly, a change in mindset at top management level is required. In the highly collaborative environment of integrated ecosystems,

27

companies are required to be willing to engage with external parties, includ-ing even their competitors. This is of central importance as it is the only way to realize the benefits in terms of cost efficiencies and new business models. Unlike in the classical business environment, this inevitably implies an in-creased obligation to exchange data with the other participants of the ecosys-tem. In order to master the technological challenges and to determine new fields of business, industrial companies are advised to establish innovation hubs, acquire startups or to collaborate with external partners. A further es-sential element is the governance and design of such ecosystems. Especially for competitors operating in the same ecosystem it is of utmost importance to establish a neutral platform design. Both rights and obligations in these eco-systems must be equally distributed to avoid an imbalance of benefits. Only then will the participants be willing to engage in the ecosystem and collabo-rate and exchange data with other actors.

Summary of Research Results

Throughout the discussion, it became evident that blockchain technology will have a significant impact on the role of the CFO of an industrial company. In addition to the subsequent summary, Figure 6 graphically illustrates these results.

Looking at the CFO’s core responsibility of taking charge of the financial man-agement of his organization, the blockchain technology has the potential of considerably optimizing the accounting, reporting and auditing activities of the CFO. This originates in the technology’s characteristics of transparency, immutability and cryptography offering a company-wide and inter-depart-mental single source of truth. Using blockchain-based smart contracts offers the possibility to predefine and therefore automate existing business pro-cesses across company borders without the need for time- and cost-intensive reconciliations. Importantly, the blockchain is not to be understood as a re-placement for existing ERP systems but rather as an additional building block to make existing systems more performant and interoperable. Thus, the blockchain technology creates a decentralized database, providing the CFO with a central and real-time insight into his company's key financial figures.

28

The concentrated data repository then allows other emerging technologies, such as AI, to be used to automate accounting, auditing and reporting. More-over, the increased data availability and accuracy also enables the CFO to de-velop more sophisticated financial strategies and prognoses. Likewise, the in-creased data transparency considerably can reduce the CFO’s liability risks by offering a complete audit trail.

The digitization and the IoT, along with the continuing growth in data vol-umes, are shifting the CFO function to a supportive role that assists the CEO in formulating the company's corporate strategy. Here, the blockchain tech-nology is an instrument that assists the CFO in authenticating, standardizing and structuring disparate types of data originating from internal as well as external sources. The resulting data optimization provides the CFO with the ability to perform advanced data analytics. Internal financial data can thus be combined with other data sources to enable the CFO to play a leading role in the formulation of corporate strategy. Thereby, the CFO can support other members of the C-Suite more efficiently in formulating the strategic orienta-tion of the organization.

The blockchain will serve as a key technology to facilitate the complete inte-gration of data flow of all functions involved in the economic process of the Industry 4.0. Consequently, for a CFO of an industrial company operating under the influence of the Machine Economy, the blockchain technology will have a significant influence on the role-specific KPIs. First, the blockchain offers the possibility to considerably reduce operational expenditures of ac-counting, reporting and auditing activities through the integration of ma-chines into blockchain networks. Underlying smart contracts thus enable ma-chines to autonomously conduct payment transactions (M2M payments) as well as to autonomously control the transaction-related business process lifecycle without the need for interventions of human-operated accounting departments. Secondly, in the environment of the Industry 4.0, the block-chain technology improves the working capital management of a CFO. The blockchain facilitates full transparency and integrity of sensors’ telemetry data measuring a company’s assets. The highly-accurate sensor data enables the CFO to capitalize previously hidden inventory on the balance sheet as well as to minimize inventory levels. Moreover, autonomously and immediate

29

M2M payments reduce the Days Sales Outstanding. Thirdly, the use of block-chain improves the CFO’s treasury and cash management. Through the im-plementation of smart contracts, payment flows of machines can be pro-grammed. In addition to basic M2M payment transactions, more complex business logics such as dynamic leasing or factoring can be implemented – using conventional currencies as a vehicle, such as the Euro. Fourthly, block-chain enables the CFO to improve an organization’s capital provision by the blockchain-enabled granular securitization of industrial components. There-fore, capital assets such as singular machines or silos can be made accessible to the capital markets enabling a machine to independently control its own capital provision and to be off-balanced of the company’s balance sheet. Con-sequently, the dependence of industrial firms on banks will diminish in the future. However, for the CFO to be able to take advantage of these KPI-en-hancing benefits, both internal and external requirements must be met. On the internal side, this includes both the technical and digital competencies of the CFO as well as an appropriate organizational structure and a sufficient budget for effective change management. On the external side, this encom-passes bringing conventional currencies as well as identities onto the block-chain.

Blockchain technology, through its inherent characteristic of data integrity and transparency will facilitate integrated business ecosystems, serving as a backbone for applications and business models in the fields of e.g. Industry 4.0, Mobility and Energy. The emerging networked economy facilitates new forms of inter-organizational and inter-industry collaboration. Particularly in convergence with other emerging technologies such as IoT and AI, a high de-gree of automation and business process optimization is achieved. The nec-essary predictions for integrated ecosystems include a standardization of blockchain protocols, a change of mindset in the top management of compa-nies as well as a neutral platform governance, as shown in figure 3.

30

Figure 3

Impact of blockchain technology on CFOs KPIs and skill set

31

Table 2

List of interviewed experts

If you like this article, we would be happy if you forward it to you colleagues or share it on social networks.

Anna Caroline Lange is a Business Analyst at micobo GmbH, a financial technology advisor and software provider offering enterprise blockchain so-lutions, Tokenization of Assets and expertise in Digital Assets. She has gained expertise in consulting clients from different industries focusing on tokeniza-tion solutions for primary market issuances complying with regulatory re-quirements. She is also a Certified Corda Developer by R3. She has completed her studies in Management (M.Sc.) in Germany, Spain and the United States.

32

You can contact her via mail (ac.lange@icloud.com) and LinkedIn (https://www.linkedin.com/in/anna-caroline-lange-50bba1b4/).

Philipp Marcello Schulden is chief operations officer of the Frankfurt School Blockchain Center at the Frankfurt School of Finance & Management. In the blockchain environment, he has supervised numerous international projects and research initiatives. He also possesses expertise in the field of application possibilities of blockchain technology in the area of the Industry 4.0. He completed his studies in Management (M.Sc.) in Germany, Russia, Peru and South Korea. You can contact him via mail (philipp.schulden@fs-blockchain.de) and LinkedIn (https://de.linkedin.com/in/philipp-marcello-schulden).

Prof. Dr. Philipp Sandner is head of the Frankfurt School Blockchain Center (FSBC) at the Frankfurt School of Finance & Management. In 2018, he was ranked as one of the “Top 30” economists by the Frankfurter Allge-meine Zeitung (FAZ), a major newspaper in Germany. Further, he belongs to the “Top 40 under 40” — a ranking by the German business magazine Capital. The expertise of Prof. Sandner in particular includes blockchain technology, crypto assets, distributed ledger technology (DLT), Euro-on-Ledger, initial coin offerings (ICOs), security tokens (STOs), digital transformation and en-trepreneurship. You can contact him via mail (email@philipp-sandner.de), via LinkedIn (https://www.linkedin.com/in/philippsandner/) or follow him on Twitter (@philippsandner).

Ahlrichs, R. (2012). Experteninterviews: Methodisches Vorgehen. In Zwischen sozialer Verantwortung und ökonomischer Vernunft (pp. 105–114). Wiesbaden: VS Verlag für Sozialwissenschaften. https://doi.org/10.1007/978-3-531-94355-8_6

Andoni, M., Robu, V., Flynn, D., Abram, S., Geach, D., Jenkins, D., … Peacock, A. (2019). Blockchain technology in the energy sector: A systematic review of challenges and opportunities. Renewable and Sustainable Energy Reviews, 100(1), 143–174. https://doi.org/10.1016/j.rser.2018.10.014

33

Anton-Haro, C., & Dohler, M. (2014). Machine-to-machine (M2M) Communications: Architecture, Performance and Applications.

Bollman, G., Building, F., Gibbins, D., & Kay, M. (2016). Is the future of finance new technology or new people? Ey, 1–22.

Caglio, A., Dossi, A., & Van der Stede, W. A. (2018). CFO role and CFO compensation: An empirical analysis of their implications. Journal of Accounting and Public Policy, 37(4), 265–281. https://doi.org/10.1016/j.jaccpubpol.2018.07.002

Christidis, K., & Devetsikiotis, M. (2016). Blockchains and Smart Contracts for the Internet of Things. IEEE Access, 4, 2292–2303. https://doi.org/10.1109/ACCESS.2016.2566339

Cisco. (2019). Cisco Visual Networking Index: Global Mobile Data Traffic Forecast Update, 2017–2022 White Paper.

Dai, J., & Vasarhelyi, M. A. (2017). Toward Blockchain-Based Accounting and Assurance. Journal of Information Systems, 31(3), 5–21. https://doi.org/10.2308/isys-51804

Datta, S., & Iskandar-Datta, M. (2014). Upper-echelon executive human capital and compensation: Generalist vs specialist skills. Strategic Management Journal, 35(12), 1853–1866. https://doi.org/10.1002/smj.2267

Donaldson, S. E., Siegel, S. G., Williams, C. K., & Aslam, A. (2018). Meeting the Cybersecurity Challenge. In Enterprise Cybersecurity Study Guide (pp. 53–92). Berkeley, CA: Apress. https://doi.org/10.1007/978-1-4842-3258-3_2

Dumas, M., La Rosa, M., Mendling, J., & Reijers, H. A. (2013). Fundamentals of Business Process Management. Berlin, Heidelberg: Springer Berlin Heidelberg. https://doi.org/10.1007/978-3-642-33143-

34

5

Eichmann, K. (2018). The future client of an energy utility company will be a machine.

Fanning, K., & Centers, D. P. (2016). Blockchain and Its Coming Impact on Financial Services. Journal of Corporate Accounting & Finance, 27(5), 53–57. https://doi.org/10.1002/jcaf.22179

Freitag, E. (2016). Als CFO Industrie 4.0 gestalten. Controlling & Management Review, 60(5), 56–63. https://doi.org/10.1007/s12176-016-0071-2

Gandomi, A., & Haider, M. (2015). Beyond the hype: Big data concepts, methods, and analytics. International Journal of Information Management, 35(2), 137–144. https://doi.org/10.1016/j.ijinfomgt.2014.10.007

Gartner Group (Hrsg.). (2012). Gartner IT Glossary: Big Data. In Gartner IT Glossary. Retrieved from https://www.gartner.com/it-glossary/big-data/

Ghasemaghaei, M. (2019). Does data analytics use improve firm decision making quality? The role of knowledge sharing and data analytics competency. Decision Support Systems, 120(January), 14–24. https://doi.org/10.1016/j.dss.2019.03.004

Halpin, H., & Piekarska, M. (2017). Introduction to Security and Privacy on

the Blockchain To cite this version : HAL Id : hal-01673293 Introduction to Security and Privacy on the Blockchain.

Higgins, M., & Sandner, P. (2019a). Blockchain Business Models for Autonomous IoT Sensor Devices. Retrieved from http://explore-ip.com/2019_Blockchain-Business-Models-for-Autonomous-IoT-Sensor-Devices.pdf

35

Hileman, G., & Rauchs, M. (2017). 2017 Global Cryptocurrency Benchmarking Study. SSRN Electronic Journal, 44(0). https://doi.org/10.2139/ssrn.2965436

Hoitash, R., Hoitash, U., & Kurt, A. C. (2016). Do accountants make better chief financial officers? Journal of Accounting and Economics, 61(2–3), 414–432. https://doi.org/10.1016/j.jacceco.2016.03.002

Hommel, U., Fabich, M., Schellenberg, E., & Firnkorn, L. (2012). The strategic CFO: Creating value in a dynamic market environment (p. 315). Wiesbaden: Springer. Retrieved from https://books.google.de/books?id=QOJno5WwlcwC&lr=&hl=de&source=gbs_navlinks_s

Houben, R., & Snyers, A. (2018). Cryptocurrencies and blockchain Legal context and implications for financial crime, money laundering and tax evasion STUDY Requested by the TAX3 committee Policy Department for Economic, Scientific and Quality of Life Policies, (July).

Hung, M. (2017). Leading the IoT, 29. Retrieved from https://www.gartner.com/imagesrv/books/iot/iotEbook_digital.pdf

IHS. (2016). Internet of Things (IoT) connected devices installed base worldwide from 2015 to 2025 (in billions). Retrieved July 29, 2019, from https://www.statista.com/statistics/471264/iot-number-of-connected-devices-worldwide/

Jarrar, Y. F., Al-Mudimigh, A., & Zairi, M. (2000). ERP implementation critical success factors-the role and impact of business process management. In Proceedings of the 2000 IEEE International Conference on Management of Innovation and Technology: (Vol. 1, pp. 122–127). IEEE. https://doi.org/10.1109/ICMIT.2000.917299

Jones, L. R., & McCaffery, J. L. (1993). Implementation of the Federal Chief Financial Officers Act. Public Budgeting & Finance, 13(1), 68–76.

36

https://doi.org/10.1111/1540-5850.00966

Kaiser, R. (2014). Qualitative Experteninterviews: Konzeptionelle Grundlagen und praktische Durchführung. In Qualitative Experteninterviews: Konzeptionelle Grundlagen und praktische Durchführung (1st ed., pp. 1–20). Siegen: Springer Fachmedien Wiesbaden.

Keimer, I., & Egle, U. (2018). Die Treiber der Digitalisierung im Controlling. Controlling & Management Review, 62(4), 62–67. https://doi.org/10.1007/s12176-018-0021-2

Kirchberg, A., & Müller, D. (2016). „Digitalisierung im Controlling: Einflussfaktoren, Standortbestimmung und Konsequenzen für die Controllerarbeit. Konzerncontrolling 2020, 79–96. https://doi.org/10.1016/j.ijcard.2016.01.031

Kokina, J., & Davenport, T. H. (2017). The Emergence of Artificial Intelligence: How Automation is Changing Auditing. Journal of Emerging Technologies in Accounting, 14(1), 115–122. https://doi.org/10.2308/jeta-51730

Kurzrock, B.-M. (2014). Anleitung für Experteninterviews im Rahmen wissenschaftlicher Arbeiten am Fachgebiet Immobilienökonomie. Kaiserslautern. Retrieved from https://www.bauing.uni-kl.de/fileadmin/immobilien/pdf/Anleitungen/Anleitung_fuer_Expertengespraeche_FG_IOE.pdf

Lafuente, G. (2015). The big data security challenge. Network Security, 2015(1), 12–14. https://doi.org/10.1016/S1353-4858(15)70009-7

MaaS Alliance. (2018). Creating an Ecosystem of Integrated Mobility Services. Retrieved July 25, 2019, from https://maas-alliance.eu/creating-ecosystem-integrated-mobility-services/

37

Makhdoom, I., Abolhasan, M., Abbas, H., & Ni, W. (2019, January 1). Blockchain’s adoption in IoT: The challenges, and a way forward. Journal of Network and Computer Applications. Academic Press. https://doi.org/10.1016/j.jnca.2018.10.019

Malterud, K., Siersma, V. D., & Guassora, A. D. (2010). Sample Size in Qualitative Interview Studies: Guided by Information Power. Qualitative Health Research, 9(4). Retrieved from https://doi.org/10.1177/1049732315617444

Maroufi, M., Abdolee, R., & Tazekand, B. M. (2019). On the Convergence of Blockchain and Internet of Things (IoT) Technologies. Journal of Strategic Innovation and Sustainability, 14(1). https://doi.org/10.33423/jsis.v14i1.990

Marr, B. (2018). How Much Data Do We Create Every Day? The Mind-Blowing Stats Everyone Should Read. Forbes Media LLC., 19–22. Retrieved from https://www.forbes.com/sites/bernardmarr/2018/05/21/how-much-data-do-we-create-every-day-the-mind-blowing-stats-everyone-should-read/#7c4933c60ba9

Martínez Franco, C., Feeney, O., Quinn, M., & Hiebl, M. R. W. (2017). Position practices of the present-day CFO: A reflection on historic roles at Guinness, 1920–1945. Revista de Contabilidad, 20(1), 55–62. https://doi.org/10.1016/j.rcsar.2016.04.001

Mendling, J., Dustdar, S., Gal, A., García-Bañuelos, L., Governatori, G., Hull, R., … Dumas, M. (2018). Blockchains for Business Process Management - Challenges and Opportunities. ACM Transactions on Management Information Systems, 9(1), 1–16. https://doi.org/10.1145/3183367

Mian, S. (2001). On the choice and replacement of chief financial officers. Journal of Financial Economics, 60(1), 143–175.

38

https://doi.org/10.1016/S0304-405X(01)00042-3

Molla, A., & Bhalla, A. (2006). ERP and Competitive Advantage in Developing Countries: The Case of an Asian Company. The Electronic Journal of Information Systems in Developing Countries, 24(1), 1–19. https://doi.org/10.1002/j.1681-4835.2006.tb00156.x

Nakamoto, S. (2008). Bitcoin: A Peer-to-Peer Electronic Cash System. Retrieved from www.bitcoin.org

Otto, B., & Weber, K. (2018). Data Governance. In Daten- und Informationsqualität (pp. 269–286). Wiesbaden: Springer Fachmedien Wiesbaden. https://doi.org/10.1007/978-3-658-21994-9_16

Outlier Ventures. (2016). Blockchain-Enabled Convergence: Understanding The Web 3.0 Economy. Retrieved from https://outlierventures.io/wp-content/uploads/2018/11/Blockchain-Enabled-Convergence-Whitepaper.pdf

Outlier Ventures. (2018). The Convergence Ecosystem Convergence 2.0 Building the Decentralised Future. Retrieved from https://outlierventures.io/wp-content/uploads/2019/05/The_Convergence_Ecosystem_Report_Outlier_Ventures_2018.pdf

Paryasto, M., Alamsyah, A., Rahardjo, B., & Kuspriyanto. (2014a). Big-data security management issues. In 2014 2nd International Conference on Information and Communication Technology, ICoICT 2014 (pp. 59–63). https://doi.org/10.1109/ICoICT.2014.6914040

Paryasto, M., Alamsyah, A., Rahardjo, B., & Kuspriyanto. (2014b). Big-data security management issues. 2014 2nd International Conference on Information and Communication Technology, ICoICT 2014, (0), 59–63. https://doi.org/10.1109/ICoICT.2014.6914040

39

Petersson, D. (2018). How Smart Contracts Started And Where They Are Heading. Forbes. Retrieved from https://www.forbes.com/sites/davidpetersson/2018/10/24/how-smart-contracts-started-and-where-they-are-heading/#6dddd21d37b6

Raguseo, E. (2018). Big data technologies: An empirical investigation on their adoption, benefits and risks for companies. International Journal of Information Management, 38(1), 187–195. https://doi.org/10.1016/j.ijinfomgt.2017.07.008

Reyna, A., Martín, C., Chen, J., Soler, E., & Díaz, M. (2018). On blockchain and its integration with IoT. Challenges and opportunities. Future Generation Computer Systems, 88, 173–190. https://doi.org/10.1016/j.future.2018.05.046

Sandner, P., & Schulden, P. M. (2019). Speciality Grand Challenges: Blockchain. Frontiers in Blockchain, 2, 1. https://doi.org/10.3389/fbloc.2019.00001

Sandner, P., & Valenta, M. (2017). 18_Valenta & Sandner - Comparison of Ethereum, Hyperledger Fabric and Corda.pdf.

Scheer, A.-W., Adam, O., & Erbach, F. (2005). Next Generation Business Process Management. In Von Prozessmodellen zu lauffähigen Anwendungen (pp. 1–15). Berlin/Heidelberg: Springer-Verlag. https://doi.org/10.1007/3-540-27204-6_1

Schlatt, V., Schweizer, A., Urbach, N., & Fridgen, G. (2016). Blockchain Grundlagen, Anwendungen und Potenziale - Fraunhofer Institut.

Statista. (2017). Volume of data/information created worldwide from 2005 to 2025 (in zetabytes). Statista - The Statistics Portal, 2025. Retrieved from https://www-statista-com.esc-web.lib.cbs.dk:8443/statistics/871513/worldwide-data-created/

40

Statista. (2019). Internet of Things (IoT) connected devices installed base worldwide from 2015 to 2025 (in billions). 2019. Retrieved from https://www.statista.com/statistics/471264/iot-number-of-connected-devices-worldwide/

Statistiken, W., & Thema, Z. U. M. (2019). Anteil der Unternehmen in Deutschland mit.

Statistisches Bundesamt. (2017). Anteil der Unternehmen in Deutschland mit Nutzung einer ERP-Software, nach Unternehmensgröße im Januar 2017. Retrieved July 18, 2019, from https://de.statista.com/statistik/daten/studie/795254/umfrage/einsatz-von-erp-software-in-unternehmen-nach-unternehmensgroesse/

Sümmermann, D., Öge, D., Smolenski, M., Fridgen, G., & Rieger, A. (2018). The Open Mobility System: OMOS. Retrieved from https://www.omos.io/wp-content/uploads/whitepaper/OMOS_concept_paper.pdf

Swan, M. (2015). Blockchain : Blueprint para uma nova economia. Retrieved from https://books.google.com.br/books?hl=en&lr=&id=RHJmBgAAQBAJ&oi=fnd&pg=PR3&dq=blockchain&ots=XQvHE--Tj5&sig=976PvT8nIJ2rtMmgU_dzNeKKoY4

Tankard, C. (2012). Big data security. Network Security, 2012(7), 5–8. https://doi.org/10.1016/S1353-4858(12)70063-6

Truby, J. (2018). Decarbonizing Bitcoin: Law and policy choices for reducing the energy consumption of Blockchain technologies and digital currencies. Energy Research and Social Science, 44(1), 399–410. https://doi.org/10.1016/j.erss.2018.06.009

Wang, H., Zheng, Z., Xie, S., Dai, H. N., & Chen, X. (2018). Blockchain challenges and opportunities: a survey. International Journal of Web

41

and Grid Services, 14(4), 352–376. https://doi.org/10.1504/ijwgs.2018.10016848

Yli-Huumo, J., Ko, D., Choi, S., Park, S., & Smolander, K. (2016). Where Is Current Research on Blockchain Technology?—A Systematic Review. PLoS ONE, 11(10), 1–27. https://doi.org/10.1371/journal.pone.0163477

Zorn, D. M. (2004). Here a Chief, There a Chief: The Rise of the CFO in the American Firm. American Sociological Review (Vol. 69). Retrieved from https://search.proquest.com/docview/218798731/fulltextPDF/9D083766FCAA41F6PQ/1?accountid=132208

Figure 3

42

43

1 Based on Himmelmann (2009).