With 2020 on the horizon, CFOs are thinking about the potential challenges they will face in the New Year. Increased competition and the threat of a possible economic downturn are prompting many organizations to find new ways to cut costs, increase agility, and better distinguish themselves from their competitors. To achieve these goals, many organizations are looking not only to modernize themselves digitally but also to undergo a comprehensive business transformation. But as more organizations plan on executing digital finance transformations in 2020, one must ask, “what is the role of the CFO today?”
The New CFO
Advances in technology have dramatically changed the world of finance, and CFOs are, therefore, looking at how to best integrate these new digital solutions into their organizations.
For example, finance automation is increasingly commonplace thanks to technologies like robotic process automation (RPA), which is a software that can effectively handle routine tasks. Roughly 42% of financial activities can be automated completely, and many more tasks can be partially automated. This includes tasks such as invoice processing, report creation, data collection, and many auditing tasks. As more of these routine duties are automated, finance teams time is freed up to pursue other, more high-level tasks.
Similarly, modern financial management systems that are built in the cloud allow CFOs and other financial executives to pull real-time data and reports. This effectively destroys artificial time restraints for reporting and allow finance teams to spot challenges or opportunities as they emerge and change strategies accordingly. In other words, organizations don’t need to wait until a monthly, quarterly, or annual report to compile and view important data and course-correct accordingly.
Shifting expectations and changes in the marketplace are forcing CFOs to look at where they fit within their organization and see what more they can do to help achieve core business objectives.
CFOs also need to collaborate more with the rest of the C-suite, especially the CEO. They need to be more involved in strategy development and provide data-backed recommendations when important decisions need to be made. According to Brook Selassie of Gartner, “Twenty-two percent of operational decision-makers do not consider a single financial-soundness criterion in their decisions.” At the same time, CFOs need to find ways to partner with other departments in order to execute more revenue-generating initiatives.
The Role of the CFO Today
According to Gartner, “85% of finance teams are currently undergoing or planning a finance transformation.” This makes sense, given that a digital finance transformation is an important step on the path to a business transformation, helping to lay the data foundation for other digital initiatives.
Modern CFOs need to adjust their roles so that they can maximize the value of a digital finance transformation as well as stay on top of current business trends. To that end, CFOs need to do the following:
Build Analytical, Tech Savvy Finance Teams
CFOs that can automate key financial tasks will need to take a hard look at their team’s existing roles and how they will change going forward. With fewer routine tasks on their plates, the finance staff need to pivot into more strategic, analysis-based roles. In other words, instead of compiling and authenticating data, staff will need to look at said data and find new opportunities for improvement.
In some cases, this may mean restructuring the entire finance departments, creating new roles and potentially sunsetting other roles. It may also require additional training for finance teams – not just from a technology standpoint but from a strategy standpoint as well. While this change can be dramatic, it also puts finance in a position in which it can provide more value to the organization.
Discover New Business Opportunities
With the wealth of analytics data that a digital finance transformation provides, CFOs can act as digital detectives, combing through analytics data in order to find new business opportunities. Finance leaders can then partner with others within the organization to develop a strategy around these opportunities, providing the necessary data and analysis.
Be a Collaborator
In order to help organizations be more agile and spur innovation, finance departments are adopting a more collaborative approach to working with other departments. In addition to pointing out potential opportunities based on their observations, CFOs and other finance leaders need to communicate with others throughout the organization and find ways to better support other departments’ initiatives. This means learning about the goals of these departments, their current challenges, and at least a basic idea of how they operate. By learning more about how other parts of the organization operate, CFOs are better positioned to provide insights and support to those departments.
This support needs to extend to innovation initiatives. Finance, by its very nature, is analytical and data-driven. Terms like “creativity” and “innovation” are usually reserved for other departments in the organization. However, as the need for organizations to innovate continues to grow, CFOs need to find ways to help spur innovation internally while at the same time finding ways to minimize the risk from these new initiatives as well as find data that can provide guidance on these projects.
While technology can help enable cross-department coordination, it isn’t the only catalyst for this trend; changes in business culture and increased competition have prompted many organizations to reconsider roles that were once simply thought of as transactional, including finance and HR. To stay competitive, finance departments can no longer operate on a purely transactional basis; nor can they continue to see themselves as mostly separate from the rest of their organizations.
Digital Finance Transformation: Pathway to the New Finance
The role of the CFO today is one that involves itself more closely with the rest of the organization, providing advice while at the same time collaborating with others. From the technology standpoint, the CFO should not only play a critical role in a digital transformation project but take an active and ongoing role to ensure that both finance and the rest of the organization utilize the new tools to their fullest. Beyond the technology side of a transformation, CFOs need to play an active role in organizational change, collaborating with others in the C-suite to achieve business objectives and increase innovation.
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