Digital Transformation » The digital traits of the CFO

By Andrew Hicks, CFO at Advanced

The finance function is changing. More than ever, it is faced with tackling the increasing pace of regulatory change and demands from the business to support compliance, risk and growth.

It’s perhaps no surprise that CFOs are under pressure to digitise and improve the finance function. Many tasks can be automated through sophisticated and intuitive finance management systems, freeing up finance teams to provide value add analysis. The right technology can even strengthen the relationship between the CFO and CEO, where the CFO acts as the CEO’s ‘sounding board’.

Finance leaders need to grasp this opportunity – but, in doing so, they must hold a strong knowledge of technology, understand their organisation’s strategy and operations, digitise the finance function and improve its value to the organisation, all while managing this significant change.

Simply put, technology is changing the role of the CFO. It has taken on new dimensions, and will continue to do so, requiring new skills and capabilities. We already know that technology is critical in transforming the finance function to make it robust in dealing with regulatory change while supporting the business to meet its aims. Surely, then, the CFO must understand technology?

If CFOs want to be digital pioneers and lead business change, they need more than just financial expertise. Technical skills will be core to the role in the coming years, as technology and finance become more closely intertwined and tasks that have traditionally sat within IT or administration teams, such as analysing big sets of data and information, fall into the realm of the CFO.

In the McKinsey Global Survey on the role of the CFO, finance leaders report there are new demands on their time, such as digitising critical business activities in addition to traditional finance duties.

Meanwhile a separate report from CFO Research finds that 64 percent of senior finance executives have taken action to upgrade their skills, while 80 percent said they planned to do so, showing that the vast majority recognise the importance of technology to their role. Are your IT skills up to scratch?

Here are some of the most important digital traits of a CFO:

Anticipates future needs of the business

Reassuringly, more and more CFOs are seeing their role expand beyond traditional finance, helping them find new ways to add value across their business. There are opportunities to not only improve and broaden the use of data to help predict the future for their organisation but make incremental improvements in its operations to increase profitability. Analytics readiness is still predominantly driven by business unit heads. The CFO now has the opportunity to take charge of this area.

As Deloitte rightly states, ‘given that many CFOs and their finance teams traditionally have led and used data-driven analytics for strategic aspects of managing the business, a case can be made for ceding ownership of analytics to the finance chief.’

Drives change across the business

Businesses are increasingly looking to the CFO to help improve performance by the take-up of digital technologies such as automation which can help refine business models and open new revenue streams. CFOs must therefore be aware of the impact – both positive and potentially negative – on workflow, processes and people. Strong communication and project management skills will be paramount, along with a willingness to understand employee skillsets and help them develop. In undertaking this, CFOs will become entrenched in driving improved business performance. So, if they are to take on a more strategic, end-to-end role, this means they will need to understand the other areas of the business. In doing so, they can elevate their own position on the board, and help to create a more collaborative, informed C-suite and a more connected business.

Handles complex compliance and risk analysis

A CFO will see a myriad of risks fall under their responsibility. This means they will need a strong understanding of their organisation’s strategy, culture and operations which includes customer-facing roles and the supply chain. A compliance programme will have many moving parts like technology, processes and resource requirements so, while a business ultimately wants to collect and analyse data to grow profitability, it’s also vital it’s able to meet compliance requirements. This could include customer call data, transactional records, audit information and compliance exception reports. The CFO needs the skills to understand and address the risks that come with them.

Deals with non-financial data

On the theme of risk, some organisations are looking to better understand both traditional media and social media monitoring to help gauge perception of their brand or to uncover problems. Analysing non-financial data inevitably brings the CFO into working relationships with other departments, such as marketing and sales, which aligns finance with business improvement and increases the function’s value to the organisation. This means their responsibilities are expanding outside of finance, giving them insight into more actionable data than ever before.

Sees technology as investment

The automation of routine tasks will enable finance to devote time to data analysis and, ultimately, business support. The good news is that the adoption of Cloud technology helps organisations avoid much of the up-front capital expenditure that on-premise solutions require. The benefits of the Cloud for finance are wide-ranging. Firstly, there are various efficiencies that can be achieved. With careful planning, Cloud-based tools can help simplify and improve workflows, particularly where ‘working anywhere’ or real-time collaboration is required. Subsequently, document management becomes easier as information is stored in one location. Regulatory compliance, which we have already shown is a key driver of change in the finance function, can then be better managed.

The bottom line is that the CFO that isn’t a ‘connected CFO’ will be lagging behind. It will no longer be acceptable for a CFO not to maximise the vast amount of data available at their fingertips to provide the rest of the business with meaningful and insightful data analysis.

According to the Economic Intelligence Unit, ‘the future finance professional is as much a strategist as an accountant’. And, according to our own Annual Trends Survey, nearly half of senior decision makers believe the most important attribute for a business leader in the digital era is the ability to react with pace and make bold decisions. This puts digital CFOs in a powerful position, as this level of bold decision making can only take place when supported by real-time, data-driven insights.

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