A new breed of the Chief Financial Officer (CFO) is emerging, with their primary role no longer in financial reporting, but rather in driving strategy and taking technological decisions that affect the whole organisation, according to a report from Sage.
The report’s objective, titled ‘Sage CFO 3.0 – digital transformation beyond financial management’, was to investigate the future of business finance. In doing so, it revealed a significant evolution of the CFO’s job function, finding they are having to become a ‘ninja of numbers’, focusing on digital transformation, data analytics, cybersecurity, and financial accounting.
Of the 500 senior in-house financial decision-makers surveyed from SMEs, nine-in-ten (94%) believed that their role has expanded ‘significantly’ over the last five years, while six-in-ten said that they are primarily responsible for digital transformation.
Despite this, two-thirds (64%) said that they are still unable to make data-driven decisions to drive business change, and 42% are spending just as much time collecting data as they are analysing it, limiting the productivity of the finance function.
CFOs expected to be visionaries
Sabby Gill, Managing Director UKI at Sage said: “CFOs are expected to be ‘visionaries’, using data to make intelligent decisions, in order to drive digital transformation in their organisation. For this to become a reality, it has to be easier for leaders to act upon data at speed. They need tools that will empower them to use their skills and experience in a much more compelling way.
“While the burst of e-commerce and, in turn, digital transformation in business poses many opportunities, it is the very nature of e-commerce that is driving the top three challenges that financial decision-makers face – managing risk such as fraud and cybersecurity, compliance and legislation changes and adapting to changing role requirements.”
This shift in a CFO’s focus reflects the ever-evolving nature of business. End users are changing, as are employees, and the variety of tools available to businesses has grown. While heads of finance have, in the past, used their instincts to interpret figures and understand what it means for their business, they now have a host of data that has permanently changed the way decisions are made.
A similar report from Deloitte, published in The Sunday Times on 3 November 2019, echoes the findings in the Sage report, and found that organisations which are repositioning their CFOs at the heart of the business are making positive gains.
Andy Halls, lead partner for Deloitte’s Private-Equity-Backed programme, said: “From a traditional, backward-looking number cruncher, they want the role of the CFO to switch to a forward-looking chief value extractor, with sufficient vision to foresee and navigate the changes ahead and make the greatest value contribution from day one.”
However, the report in The Sunday Times also said that one-in-three CEOs are worried that their CFO is not prepared for the challenges ahead, and while the Sage report found 86% of respondents believe that automation has already improved productivity, six-in-ten are worried about the extent to which their role will be automated in the future. It is clear there are some concerns.
Sage’s Gill spoke to allay those fears, saying: “Automation does not pose a threat to the workforce, but rather an opportunity to focus on the changing requirements of the business and core competencies. It’s clear that investment in data-centric tools and skillsets will help propel business finance forward.
“The intersection between emerging technology and human interaction has created an opportunity for leaders to reimagine business, upskill and offer a more strategic and visionary approach to their role.”
There was a more positive outlook with regards to CFO’s attitude towards new financial management technology, with 94% saying the next generation of such technology has a crucial part to play as their role changes. Technological literacy was found to be the number one priority for 78% of CFOs.