This article was originally published by Financial Director on November 12, 2019.
Prior to the onset of digital transformation and recent technology advances, a Chief Financial Officer (CFO) was captain to an organization’s ship charting a company’s finance journey. In this traditional role CFOs had a clear direction for where to navigate based on past experience. They rarely steered the ship into murky waters outside of their conventional duties of financial planning and analysis.
Today digital natives are creating a tsunami, disrupting every industry. To remain relevant, companies need to quickly adapt to this new norm. To ride out the waves of innovation and automation every part of the organization needs to transform. This is having a profound impact on role of the CFO and entire finance organization. The next generation CFO has moved from accounting for company results to a bold, strategic leader defining the company’s future while continuing to maximize shareholder value.
A recent McKinsey’s study indicates that the opportunity for CFOs to act as a leading change agent has never been greater, with more than half responding that they are actively involved in developing their organization’s digital strategy. The modern-day job CFO description goes well beyond reporting and analyzing results. As a futurist and digital officer, CFOs are now leading the automation and digitization charge responsible for determining how the organization can benefit from emerging technologies.
Creating an agile, forward looking and decision centric finance organization
In this fast-changing business landscape, CFOs need to make informed strategic decisions that deliver business outcomes. This requires their functional strategies to be aligned with the overall enterprise objectives. It calls for a prescient vision from CFOs who can make quick and informed decisions. In order to keep up with the pace they need to embrace this shift and evolve alongside technology. Enterprises need to optimize their delivery model to enable CFOs to focus on complex, judgement intensive, and value-adding activities.
Modern CFOs have oceans of data at their fingertips and need to embrace cognitive capabilities to mine meaningful insights to support business decisions. Along with this data explosion comes the responsibility to secure it. This forces CFOs to act as not only champions of their data, but also as compliance and control security owners to ensure information is protected from hacking, phishing and other external breaches.
The evolution of intelligent automation supported by advances in robotic process automation (RPA) is having an unprecedented impact on the finance organization. These enhancements are ultimately reducing costs, reducing human effort, freeing employees up to perform more strategic work. CFOs need to build the right team with the proper mix of skills relevant in today’s hyper-digital, ever-evolving workforce. They need to create an agile, forward looking and decision centric finance organization.
CFO: the futurist
The CFO role is now a value creator and strategic partner to the business. This shift is happening quickly, forcing the traditional expectations of certain roles to evolve. In fact, according to Ernst & Young’s DNA of the CFO report, 69% of CFOs and finance leaders report they are already seeing this role fundamentally change as traditional finance tasks become more automated or managed in shared services centers.
With this in mind, here are three crucial steps for CFOs to follow when looking to evolve as a futurist:
Cultivate an innovation-driven mindset: Given the rapid rate at which competition is heightening, innovation represents an absolute mandate for companies to survive. Organizations that are resistant to change are at a much higher risk of failure if innovation is not prioritized. It is therefore the CFO’s responsibility to drive a concerted effort in ensuring the right financial systems and processes are in place to achieve a clearer, more accurate, 360-degree view of the organization.
Digest all the data you can for more intelligent decision-making: An increasing differentiator in the success of CFOs is how they effectively use data to drive insights. In particular, leveraging data analytics is worth its weight in gold when it comes to forecasting future trends and events. With predictive analytics, CFOs can make informed, critical business decisions and revenue projections based on current demands, rather than relying solely on past performance.
Prioritize Customer Engagement: Always keep customers at the forefront. They are the top priority of every organization, especially in what’s been coined the “age of the customer.” This era is one defined by rapid escalations in customer expectations, so much so that businesses not prioritizing the customer experience are being left behind in the dust. Part of this means ensuring the security and privacy of customer data and continually striving to bring value to customers.
With these key steps in mind, more CFOs are directing their financial fleet away from traditional accounting duties. Instead, they’re embarking on a journey toward becoming a new visionary to their organizations, one where they invest more time and energy into how to strategically transform their operations. With this, a new cross-functional role is emerging where CFOs have become fearless digital transformation leaders, launching widespread automation deployments and breaking down operational silos to align more teams through digitization. They are also transforming into big data miners who provide access to the right information, break down data and use predictive analytics to produce better insights.
Modernizing the CFO’s job description
Technology’s changing tides are modernizing today’s CFO job description, ushering in a new era where digitization is redesigning and delivering a more efficient operations. CFOs are now not just financial machinists; they are contemporary strategists, technology experts, data interpreters and digital transformation advocates who can look ahead and plan for the future.
By adopting this futuristic mindset with an acceptance of new technologies and strategies, CFOs will become the digital officers and business leaders of tomorrow.