The Changing Role Of Today’s CFO

  • Neil Kinson, Chief of Staff at Redwood Software

  • 16.03.2021 01:00 pm
  • CFOs

Financial leaders are increasingly required to become more tech-savvy. In fact, they are expected to be at the forefront of digital transformation. 

However, at Redwood Software, we’ve observed a notable gap between the existing skills and what financial teams see as vital for their profession in the future. Instead of praising abilities which are usually associated with accountancy, such as precision, numeracy and accuracy, the desired skills will centre around more strategic and forecasting thinking. 

Immense amounts of data, lack of time and resources add more long-term pressure on financial teams. As a result, it is clear that re-skilling, shifting focus towards predictive analytics as well the use of automation are key enablers for future success. With vast technological advances impacting the role of the today’s CFO, what does the future hold? 

Technology to help CFOs, not hinder 

The role is undergoing perhaps its greatest change in recent history, with fundamental changes in how the CFO must now operate in order to be considered effective. The list of responsibilities CFOs are tasked with are also overwhelming. They need to create value, contribute to the strategic vision of their organisation, predict the future — all while navigating a volatile global economy fraught with uncertainty. Each decision made is vital to the organisation and for the CFOs’ future.

With such pressures, technology has often been considered a hinderance, requiring financial professionals to develop technical skills that are not directly relevant to the value they add to the business. Finance professionals have been forced to plug the gaps in the technologies they use to meet the requirements of the processes they need. Being tech-savvy is a requirement for any professional, but being an Excel whizz and knowing Enterprise Resource Planning (ERP) tools used to be enough, increasingly CFOs need to be experts in everything from scripting to Artificial Intelligence (AI) and all points in between.

All too often the wider finance teams have to force fit their process requirements to the capability of the tools they are offered, rather than having a tool that natively supports the problems they face. The finance team often has more information about customer behaviour, market trends and usage patterns that customer facing parts of the organisation do. However, the finance side don’t see the same investment in technology to aggregate and exploit this information. 

Strategy backed by data

In the future, data scientists will play an increasing role in the skills mix within the finance function, whereby businesses who can apply automation at a process level rather than simply as an optimisation of tasks will prevail.   

The CFO role is strategic, but has been focused understandably on the immediate financial health of the business, and compliance with accounting and regulatory obligations. This has left little room and capacity to advise the business, and to provide the data necessary to do so, not just governing those happening today. Given the need with Covid-19 to rightly focus on cost control, cash management and short-term financial health, it is a real risk that the role of the CFO regresses rather than becoming the catalyst for future success that it can be.

The rules and principles by which Accounting is governed, are on the whole globally recognised. This makes them excellent candidates for automation, and while AI can play a role in certain areas (document capture, data analytics and many more) it is not the complexity of the work that presents challenges for the teams, it is the simple volume of manual work and the errors that manual work introduces.  

Processes that present today’s skilled finance professionals with the information they need to apply their thoughts, knowledge and cognition are not possible today without AI and automation. In turn, these processes can then be enriched with AI tools that generally excel and analysing large volumes of information that a human would not be capable of – for example which transactions follow suspicious patterns that could indicate fraud?  

As such, automation will empower CFO’s and finance professionals in general to focus on what they trained to do, to invest their time and energy in advising the business on how to grow or improve, rather than simply being the enforcer of the roles and ensuring compliance. Most organisations recognise that they spend 80% of their time just getting the numbers right – even that is a challenge – and 20% or less analysing what those numbers tell them.

Finance is ripe for change, and so too is the role of today’s CFO. By seeking opportunities to transform the finance function using automation and other enablers, businesses will ensure they are building resilience and preparing for tomorrow. 

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